Given a downward-sloping linear demand curve, if total revenue decreases as quantity of output increases, marginal revenue must be ________.
A. positive and demand is inelastic
B. negative and demand is inelastic
C. negative and demand is elastic
D. positive and demand is elastic
Answer: B
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In the long run, output is determined solely by the supply of capital and the supply of labor, not the price level
Indicate whether the statement is true or false
Positive economic analysis
a. involves the study of firms with positive profits. b. involves how resources are actually used in an economy. c. involves judgments on how resources should be used in an economy. d. is usually thought to be a waste of time.
If price is less than the average variable cost, firms that seek to maximize profit should shut down
a. True b. False Indicate whether the statement is true or false
Exhibit 14-3 Aggregate supply and demand curves
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In Exhibit 14-3, the change in equilibrium from E1 to E2 represents:
A. deflation. B. demand-pull inflation. C. price-push inflation. D. cost-push inflation.