Q4 of 24 Page 1

In an imperfectly competitive market, if the Total Revenue is maximum, Marginal Revenue will be _______________.

zero

Explanation



In the markets experiencing imperfect competition, the average revenue (AR) and marginal revenue (MR) curves would be a downward sloping straight line with the MR being less than the AR. The TR curve will initially slope upwards, reach a maximum and then slope downwards.


The relationship between AR and MR can be stated as:


• When TR curve slopes upwards, MR will be positive.


• When TR curve is at maximum, MR will be zero.


• When TR is downward sloping, MR will be negative.


More from this chapter

All 24 →
2

Define marginal physical product.

 3

A firm is operating with a Total Variable Cost of 500 when 5 units of the given output are produced and the Total Fixed Costs are 200, what will be the Average Total Cost of producing 5 units of output?

i) 140


ii) 100


iii) 120


iv) 300

 5

State and discuss any two factors that will shift the Production Possibility Frontier (PPF) to the right.

OR


Draft a hypothetical schedule for a straight line Production Possibility Curve.

 6

Giving a reason, state the impact of each of following on the demand curve of a normal good ‘X' if

i) Price of its complementary good falls.


ii) News reports claim that the consumption of product X has a harmful effect on human health.


iii) Income of consumer increases