Economics Terms Quiz - Marginal revenue

1. The marginal revenue (MR)...

a. measures the total revenue of selling one unit.

b. measures the change in quantity when the firm lowers the price.

c. measures the change in price that is necessary to sell one more unit.

d. measures the change in total revenue when the firm sells one additional unit.

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2. Which statement about marginal revenue in perfect competition is true?

a. In a perfectly competitive market the marginal revenue is lower than the market price.

b. In a perfectly competitive market the marginal revenue is equal to the market price.

c. In a perfectly competitive market the marginal revenue is higher than the market price.

d. In a perfectly competitive market it depends on the elasticity of demand whether the marginal revenue is higher or lower than the market price.

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3. Which statement about marginal revenue of a monopoly is true?

a. In a monopoly the marginal revenue is below the market price, because to sell more units the monopolist has to lower the price.

b. In a monopoly the marginal revenue is above the market price, because by decreasing the price, the monopolist can increase sales.

c. In a monopoly it depends on the shape of the demand curve whether marginal revenue is higher or lower than the price.

d. In a monopoly the marginal revenue is always equal to half of the price.

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