Marginal revenue is _______ in the _______ range of the demand curve, _______ in the _______ range of the demand curve and _______ where demand is unit price elastic.
A) positive; positive, negative, negative; greater than zero
B) negative; inelastic; positive; elastic; zero
C) positive; inelastic; negative; positive; zero
D) negative; positive; positive; negative; less than zero

Question

Quizplus · Accepted Answer

Marginal revenue is negative in the inelastic range of the demand curve because as the quantity sold decreases, the price must be raised to maintain revenue, resulting in a negative change in revenue for each additional unit sold. In the elastic range of the demand curve, marginal revenue is positive because a decrease in price results in a large increase in quantity sold, leading to an overall increase in revenue per unit. Marginal revenue is zero where demand is unit price elastic because a small change in price does not result in a change in revenue. Option B is the only choice that correctly describes these relationships.

Marginal Revenue Is _______ in the _______ Range of the Demand

Marginal Revenue Is _ in the _ Range of the Demand