Total revenue is at a maximum when MR = 0.

Question

Quizplus · Accepted Answer

Total revenue (TR) is the product of price and quantity, which can be represented as TR = P x Q. The marginal revenue (MR) is the change in total revenue due to an additional unit sold.

When MR = 0, it means that the last unit sold did not add any new revenue to the total. In other words, any changes in the quantity sold will not affect the total revenue. This is only possible at the top of the total revenue curve, which occurs when the marginal revenue intersects the x-axis (where MR = 0).

Thus, total revenue is at a maximum when MR = 0.

Total Revenue Is at a Maximum When MR = 0