Question

For a linear demand curve, if MR = 0:

Select one:

a. TR is at its minimum.

b. and TR is at its maximum, the demand curve must be downward sloping.

c. all of the above are true.

d. the price elasticity of demand is equal to or greater than -1.0.

Answer 1

Answer -

Option (b) is correct.

Explanation -

For a linear demand curve ,if MR=0 and TR is at maximum,the demand curve must be downward sloping.

Explanation -

If MR =0,when TR is at maximum as MR is the addition in TR.,when MR becomes zero it means no increase in TR. It becomes constant at certain point and after that point it becomes zero ,with the selling of each additional unit TR will also declines.

The demand curve is downward sloping indicating inverse relationship between price and quantity demanded.when price increases ,demand decreses and vice versa.