When marginal revenue is zero, P < M R. P = MR . a small increase in price cause

Question

When marginal revenue is zero, P< MR. P= MR. a small increase in price causes no change in total revenue. a small decrease in price causes no change in total revenue. both c and d When marginal revenue is zero, P< MR. P= MR. a small increase in price causes no change in total revenue. a small decrease in price causes no change in total revenue. both c and d P< MR. P= MR. a small increase in price causes no change in total revenue. a small decrease in price causes no change in total revenue. both c and d

Explanation / Answer

At quantity zero, the marginal revenue is equal to the price---selling the first unit adds one times the price of that unit to the total revenue. As quantity increases the marginal revenue falls because as we add successive units not only is the price of the last unit lower than the price of the previous unit but all previous units have to be sold at this lower price.

Considering the above statement we find that the answer is OPTION B

ie P = MR

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