If the demand for a firm's output is inelastic, then the firm's marginal revenue is
A) positive, and an increase in price will cause total revenue to increase.
B) positive, and an increase in price will cause total revenue to decrease.
C) negative, and an increase in price will cause total revenue to increase.
D) negative, and an increase in price will cause total revenue to decrease.

Question

Quizplus · Accepted Answer

When demand is inelastic, an increase in price leads to an increase in total revenue, and marginal revenue is negative because the percentage change in quantity demanded is less than the percentage change in price.

If the Demand for a Firm's Output Is Inelastic, Then