For a monopoly firm,marginal revenue is negative when:
A)the demand curve is upward-sloping.
B)demand is elastic.
C)demand is inelastic.
D)demand is unit elastic.

Question

Quizplus · Accepted Answer

For a monopoly firm, marginal revenue becomes negative when demand is inelastic because the firm would lose more revenue from selling an additional unit than it gains from the price at which the unit is sold. This is due to the fact that in inelastic demand, the percentage change in quantity demanded is less than the percentage change in price.

For a Monopoly Firm,marginal Revenue Is Negative When