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Question
Comment on the shape of MR curve in case when TR curve is a positively sloped straight line.
Solution
Based on the relationship between MR and TR it can be said that when TR curve is a positively sloped straight line, then MR curve is a horizontal line. MR and demand curve are the same, and the price (AR) remains constant for different output levels. This happens under perfect competition.
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RELATED QUESTIONS
What would be the shape of the demand curve so that the total revenue curve is
(a) a positively sloped straight line passing through the origin?
(b) a horizontal line?
From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
|
Quantity |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
|
Marginal Revenue |
10 |
6 |
2 |
2 |
2 |
0 |
0 |
0 |
−5 |
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Comment on the shape of MR curve in case when TR curve is a horizontal straight line.
