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Comment on the shape of the MR curve in case the TR curve is a (i) positively sloped straight line, (ii) horizontal straight line. |
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Answer» Solution :(i) MR curve will be a horizontal straight line parallel to X-axis because positively sloped straight line TR curve indicates that revenue from every additional UNIT sold (i.e. MR) remains same for every level of output. (ii) When TR curve is a horizontal striaght line, MR will be ZERO. It happens because horizontal TR indicates that TR remains same at levels of output. It is possible only when revenue from additional unit sold (i.e. MR) is zero. MR curve COINCIDES with X-axis. |
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