Total revenue (TR) is calculated as
A Price × Quantity sold
B Total cost ÷ Output
C Marginal cost × Output
D Profit + Total cost
Total revenue equals the total sales receipts of a firm, calculated by multiplying price per unit by quantity sold.
Average revenue (AR) is
A TR – TC
B TR ÷ Quantity sold
C TC ÷ Quantity produced
D MR ÷ Quantity
Average revenue is revenue per unit sold, computed by dividing total revenue by total quantity sold.
Marginal revenue (MR) refers to
A Revenue per unit sold
B Total revenue at equilibrium
C Additional revenue from selling one more unit
D Difference between TR and profit
Marginal revenue measures the change in total revenue resulting from the sale of one additional unit of output.
If a firm sells 10 units at ₹20 each, its TR is
A ₹200
B ₹30
C ₹2
D ₹100
TR = P×Q = 20×10 = 200. It represents total sales receipts at that output level.
If TR increases from ₹500 to ₹560 when output rises from 10 to 11 units, MR equals
A ₹6
B ₹50
C ₹60
D ₹560
MR = (560 − 500) / (11 − 10) = 60/1 = ₹60. It is the additional revenue from the extra unit.
When a firm faces a perfectly elastic demand curve, it implies
A The firm can set any price
B The firm sells all output at one market price
C MR is always less than AR
D TR must be maximum
Under perfect competition, the firm is a price taker and sells any quantity at the given market price.
Under perfect competition, AR equals
A Price
B Marginal cost
C Total cost
D Profit
In perfect competition, AR = TR/Q = P, because each unit sells at the same market price.
Under perfect competition, the relationship between AR and MR is
A MR > AR
B MR < AR
C MR = AR
D MR = 0
Because price is constant, selling one more unit adds revenue equal to price, so MR = AR = P.
In a monopoly, the firm’s demand curve is
A Perfectly elastic
B Downward sloping
C Vertical
D Horizontal
A monopolist faces the market demand curve, which is downward sloping, so price must fall to sell more.
Under monopoly, MR is
A Equal to AR
B Greater than AR
C Less than AR
D Zero at all outputs
To sell an extra unit, monopolist lowers price; this reduces revenue on earlier units too, so MR < AR.
Under monopoly, MR curve lies
A Above AR curve
B Below AR curve
C On the same curve as AR
D Always on the X-axis
With downward sloping AR, MR falls faster and remains below AR due to the price-reduction effect.
The marginal revenue becomes negative when
A TR is rising
B TR is constant
C TR is falling
D AR is rising
MR negative means an extra unit reduces TR, which happens when TR is already declining with more output.
Total revenue is maximum when
A MR is maximum
B MR = 0
C AR = 0
D MC = 0
TR rises while MR is positive and starts falling when MR becomes negative; maximum TR occurs where MR equals zero.
In perfect competition, TR increases at a constant rate because
A Price falls with output
B Price rises with output
C Price remains constant
D Cost remains constant
With constant market price, each additional unit adds the same amount to TR, making TR a straight line from origin.
In monopoly, TR curve is typically
A A straight line through origin
B Inverted U-shaped
C Horizontal line
D Vertical line
Because price must fall to sell more, TR first rises, reaches a maximum, and then falls at higher outputs.
If AR falls as output rises, then
A MR is constant
B MR is greater than AR
C MR falls faster than AR
D MR becomes equal to cost
With downward sloping AR, MR declines more rapidly because additional sales require reducing price on earlier units.
In monopolistic competition, the firm faces
A Perfectly elastic demand
B Downward sloping demand
C Vertical demand
D Upward sloping demand
Product differentiation gives each firm some price-setting power, resulting in a downward sloping demand curve.
In monopolistic competition, MR is generally
A Equal to AR
B Greater than AR
C Less than AR
D Always zero
Like monopoly, downward sloping demand means lowering price to sell more, so MR < AR.
When a firm reduces price to sell additional units, MR becomes smaller because
A Output rises too slowly
B Revenue from previous units falls
C Cost rises immediately
D Demand becomes vertical
Price reduction applies to earlier units too, lowering their revenue and reducing MR compared to AR.
If AR is constant, then MR will be
A Greater than AR
B Less than AR
C Equal to AR
D Negative
Constant AR means price does not change with output, so additional unit adds the same revenue; hence MR = AR.
Which revenue curve is always equal to price per unit?
A TR
B AR
C MR
D Profit
Average revenue equals price because TR/Q equals price received per unit.
If price is ₹15 and output is 8 units in perfect competition, MR equals
A ₹8
B ₹15
C ₹120
D ₹0
In perfect competition, MR = AR = Price, so MR equals ₹15 for every unit sold.
A firm can have positive MR while AR is falling because
A TR is still increasing
B TR is always decreasing
C Output is fixed
D Cost is constant
Even if AR falls, TR can increase as long as the extra revenue from additional units outweighs the price drop.
When MR is positive, TR must be
A Falling
B Constant
C Increasing
D Negative
Positive MR means each additional unit adds to TR, so total revenue increases.
When MR is zero, TR is
A Minimum
B Maximum
C Negative
D Constant at zero
At MR = 0, adding one more unit does not change TR; this point corresponds to maximum TR.
A downward sloping AR curve indicates the firm has
A No control over price
B Some control over price
C Perfect elasticity
D Zero market power
Downward sloping AR means to sell more, price must be reduced, indicating some market power.
In monopoly, MR can be negative when
A Demand is elastic
B Demand is unitary elastic
C Demand is inelastic
D Demand is perfectly elastic
In the inelastic portion of demand, increasing output requires large price cuts, reducing TR so MR becomes negative.
The relationship between AR and MR in a straight-line downward sloping demand curve is that MR
A Lies above AR and has same intercept
B Lies below AR and has same intercept
C Lies below AR and has twice the slope (cuts quantity axis at half)
D Lies above AR and cuts quantity axis at half
For linear demand, MR has the same price intercept but twice the slope, intersecting the quantity axis at half of AR’s intercept.
If AR curve intersects the quantity axis at 40 units, MR curve intersects it at
A 80 units
B 20 units
C 40 units
D 10 units
For linear demand, MR cuts the quantity axis at half the AR intercept, so it will be at 20 units.
In perfect competition, the MR curve is
A Upward sloping
B Horizontal at market price
C Vertical
D Inverted U-shaped
A competitive firm can sell any quantity at market price, so MR is constant and horizontal.
Total revenue is zero when
A Price is maximum
B Quantity is maximum
C Quantity is zero
D MR is maximum
If no units are sold, TR = P×0 = 0 regardless of price level.
Average revenue falls when
A The firm is a price taker
B The firm faces downward sloping demand
C Price is constant
D Output is fixed
Under downward sloping demand, selling more requires lowering price, reducing AR.
A firm will experience AR = MR when
A It has monopoly power
B It is under perfect competition
C Demand is downward sloping
D It practices price discrimination always
In perfect competition, price is constant for every unit, so AR equals MR.
In a monopoly, AR curve is also called
A Supply curve
B Market demand curve
C Marginal cost curve
D Average cost curve
The monopolist is the industry, so it faces the market demand curve as its AR curve.
When MR is less than AR, it implies
A Price is constant
B Firm is reducing price to sell more
C Demand is perfectly elastic
D Firm is price taker
MR < AR occurs when price must be cut to increase sales, typical in imperfect competition.
Which revenue concept is most important for profit-maximizing output decision?
A Total revenue
B Average revenue
C Marginal revenue
D Fixed revenue
Profit maximization uses marginal comparison; firms expand output until MR equals MC.
If MR is greater than MC, a firm should
A Reduce output
B Increase output
C Stop production
D Maintain output
MR > MC means the extra unit adds more to revenue than cost, so producing more increases profit.
If MR is less than MC, a firm should
A Increase output
B Decrease output
C Keep output unchanged
D Increase price only
MC > MR means extra units add more cost than revenue, so reducing output increases profit.
Profit is maximized when
A TR is maximum
B MR = MC and MC cuts MR from below
C AR = AC
D TC is minimum
The equilibrium condition requires MR = MC with stability condition that MC must cut MR from below.
A firm earns normal profit when
A AR > AC
B AR < AC
C AR = AC
D MR = 0
Normal profit exists when average revenue equals average cost, meaning the firm covers all explicit and implicit costs.
Supernormal profit exists when
A AR = AC
B AR > AC
C AR < AC
D MR = MC only
When price (AR) exceeds average cost, the firm earns more than normal profit.
Loss occurs when
A AR > AC
B AR = AC
C AR < AC
D MR = 0
If average cost exceeds average revenue, total costs exceed revenues and the firm incurs losses.
Under perfect competition, a firm’s AR curve is
A Downward sloping
B Horizontal
C Upward sloping
D Vertical
The competitive firm faces a perfectly elastic demand curve, so AR is horizontal at market price.
Under monopoly, MR becomes zero at output where demand elasticity is
A Perfectly elastic
B Elastic (greater than 1)
C Unitary elastic (equal to 1)
D Inelastic (less than 1)
TR is maximum where elasticity is unitary, and MR is zero at that output level.
In general, MR is positive when demand is
A Inelastic
B Unitary elastic
C Elastic
D Perfectly inelastic
In the elastic range, increasing sales raises TR, so MR remains positive.
MR is negative when demand is
A Elastic
B Unitary elastic
C Inelastic
D Perfectly elastic
In the inelastic range, reducing price to sell more lowers TR, making MR negative.
For a monopolist, reducing price to increase output always makes MR lower because
A Costs rise instantly
B Price cut applies to all earlier units
C Demand becomes perfectly elastic
D Revenue becomes fixed
Lower price must be charged on all units sold, reducing revenue from previous units and lowering MR.
Which statement is true about TR, AR and MR?
A AR is always greater than TR
B MR can be negative even if AR is positive
C MR is always equal to AR
D TR is always constant
MR can turn negative when TR starts falling, while AR (price) may still remain positive.
If AR is ₹12 and MR is ₹12, the firm is most likely operating under
A Monopoly
B Monopolistic competition
C Perfect competition
D Oligopoly with price leadership
Under perfect competition, price is constant so AR = MR at all output levels.
The key reason MR differs from AR under imperfect competition is
A Uniform price always rises
B Firm must lower price to sell extra units
C Costs remain constant
D Output cannot change
Under downward sloping demand, selling more requires lowering price, causing MR to fall faster than AR.