PRC-3 · Chapter 12 · Question 56 of 69
For a downward-sloping demand curve, the firm's Marginal Revenue (MR) is strictly greater than zero only if:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The price elasticity of demand is greater than 1 (Elastic)
Explanation
When demand is elastic, lowering the price increases total revenue, meaning the marginal revenue of selling extra units is positive.
More Firm Theory MCQs
- Q58Price discrimination by a monopoly (charging different prices to different groups) is impossible or highly ineffective if:
- Q59Which of the following is NOT a fundamental characteristic of an Oligopoly market structure?
- Q60For a firm operating with a downward-sloping demand curve, its Total Revenue (TR) reaches its absolute mathematical maximum exactly when:
- Q61If oligopolistic firms successfully form a strict, secret cartel (collusion), the market outcome will closely resemble a monopoly, leading…
- Q62Because monopolies face zero competition, their management often becomes complacent, wasting money on unnecessary expenses and failing to…