Given a downward-sloping linear demand curve, if total revenue decreases as quantity rises, marginal revenue must be
A)positive and demand is elastic.
B)negative and demand is elastic.
C)positive and demand is inelastic.
D)negative and demand is inelastic.

Question

Quizplus · Accepted Answer

When total revenue decreases as quantity rises on a downward-sloping demand curve, it indicates that the price decrease necessary to sell more units is proportionally larger than the increase in quantity sold, which means demand is inelastic. Marginal revenue is negative because the additional revenue generated by selling one more unit is less than the loss in revenue from lowering the price to sell that unit.

Given a Downward-Sloping Linear Demand Curve, If Total Revenue Decreases