A firm in monopolistic competition has "marginal revenue" which:
A) is always greater than its marginal cost.
B) is always shown above its related down-sloping demand curve when plotted on a graph.
C) is the change in total revenue which results from the sale of one more unit of a product.
D) is always positive (i.e., greater than zero).
E) All of these.

Question

Quizplus · Accepted Answer

Marginal revenue is the change in total revenue which results from the sale of one more unit of a product. It can be either positive or negative, depending on whether selling one more unit increases or decreases total revenue. It may also be less than the price of the good, as in the case of a monopolistically competitive firm whose demand curve is downward-sloping. It is not always greater than marginal cost, as profits may not be maximized at that point.

A Firm in Monopolistic Competition Has "Marginal Revenue" Which