Which of the following statements is true?
A)The marginal revenue of a monopolistically competitive firm will be positive at high prices and negative at low prices.
B)Because the demand curve for a monopolistically competitive firm is downward-sloping, its marginal revenue will be negative.
C)The marginal revenue of a monopolistically competitive firm will be always be positive.
D)The marginal revenue of a monopolistically competitive firm will be positive at low prices and negative at high prices.

Question

Quizplus · Accepted Answer

In monopolistic competition, the marginal revenue curve lies below the demand curve. At high prices (and low quantities), marginal revenue is positive. As quantity increases and price decreases, marginal revenue can become negative.

Which of the Following Statements Is True