Question

What change in total revenue will result in
(a) A decrease in marginal revenue, and
(b) An increase in marginal revenue.

Answer 1

Answer:

(a) A decrease in marginal revenue -market differnmence This is because a reduction in price is often necessary to spur additional sales beyond the traditional demand seen for the product. The decrease in price will result in a decrease in total revenue, thus leading to a decrease in marginal revenue.

(b) An increase in marginal revenue - Marginal revenue is the increase in revenue that results from the sale of one additional unit of output. While marginal revenue can remain constant over a certain level of output, it follows the law of diminishing returns and will eventually slow down as the output level

Answer 2

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A decrease in marginal revenue -market differnmence This is because a reduction in price is often necessary to spur additional sales beyond the traditional demand seen for the product. The decrease in price will result in a decrease in total revenue, thus leading to a decrease in marginal revenue.