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JAMB Economics 2000 Question 23

Question 23

Market Structures

At the point where marginal revenue of a monopolist is equal to zero, its total revenue will be

  1. A.falling
  2. B.rising
  3. C.equal to zero
  4. D.maximum.
Show the answer and explanation

Answer: D (maximum.)

Explanation

While MR is positive, each extra sale adds to TR; once MR becomes negative TR falls. So TR is at its maximum where MR = 0.