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| 1. |
How do changes in marginal revenue affect total revenue ? |
| Answer» Solution :MR is the change in total REVENUE when one more unit of output is sold. In other words, MR is the rate of change of TR.So, when (i) MR is POSITIVE and is increasing, TR increases at an increasing rate. (II) MR is positive but is DECREASING, TR increases at a diminishing rate. (iii) MR is zero, TR is constant. (iv) MR becomes negative, TR STARTS falling. | |