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Classification of Markets based on Geographical Area Coverage

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Classification of Markets based on Geographical Area Coverage

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Questions and Answers

What can be said about the relationship between price and quantity demanded according to the text?

Price and quantity demanded have a direct relationship.

Price and quantity demanded are unrelated.

Price and quantity demanded have an inverse relationship. (correct)

Price has no effect on quantity demanded.

Why is the marginal revenue due to the third unit not equal to the price at which the third unit is sold according to the text?

Marginal revenue is always equal to the price of the product.

Two units sold earlier at a higher price lead to a loss when the price is reduced for the third unit. (correct)

Marginal revenue increases as price falls.

Selling more units at a lower price results in higher overall revenue.

How can marginal revenue be expressed according to the text?

MR = q/dTR

MR = TR - q

MR = dTR/dQ (correct)

MR = TR + q

What is the relationship between marginal revenue and average revenue in a falling average revenue schedule?

Marginal revenue is always less than average revenue. Signup and view all the answers

In what scenario is the marginal revenue equal to average revenue according to the text?

When the firm is selling at a uniform price. Signup and view all the answers

What does dTR/dQ indicate according to the text?

The slope of the total revenue curve. Signup and view all the answers

How is total revenue affected by a falling average revenue schedule?

Decreases due to lower price per unit. Signup and view all the answers

Why does marginal revenue become negative after reaching zero according to the text?

Lower prices lead to reduced revenue from additional units sold. Signup and view all the answers

What would happen to the overall revenue if a company sells all its units at a price lower than the average revenue according to the text?

Total revenue would decrease due to reduced profit margin. Signup and view all the answers

How is marginal revenue impacted when a firm sells two units at a higher price and then lowers the price significantly for subsequent units according to the text?

Marginal revenue would decrease compared to the initial price. Signup and view all the answers