What happens in a marginal analysis when revenues rise?
1 Answer
Aug 10, 2015
When the TR increases MR may remain constant or fall depending upon the type of competition prevailing in the Market.
Explanation:
Perfect Competition
TR is increasing but MR is constant.
P Q TR AR MR
20 1 20 20 20
20 2 40 20 20
20 3 60 20 20
20 4 80 20 20
Monopoly or Monopolistic Competition
TR is Increasing but MR is decreasing.
P Q TR AR MR
20 1 20 20 20
18 2 36 18 16
16 3 48 16 12
14 4 52 14 8
You must understand MR shows the rate of change of TR.
