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# Marginal revenue - Positive, negative, or zero?

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Given each of the following price elasticities, determine whether marginal revenue is positive, negative, or zero. -5, -1, -0.5

https://brainmass.com/economics/elasticity/marginal-revenue-positive-negative-or-zero-334694

#### Solution Preview

When the price-elasticity of demand is -5, the demand is elastic and ...

#### Solution Summary

The Solution determines whether marginal revenue is Positive, Negative or Zero for the given price elasticities.

\$2.19

## Practice Problems

An increase in the Federal minimum wage to \$7.25 per hour from \$5.15 per hour, assuming that \$7.25 is an effective price floor and that all other things remain constant, will:
a. reduce the number of unemployed.
b. increase the number of unemployed.
c. shift the supply of labor to the right.
d. shift the demand of labor to the right.

If a firm can produce 560 units of output with 5 workers, 600 units of output with 6 workers, then the:
a. marginal product of the 6th worker is 100 units.
b. marginal product of the 6th worker is 40 units.
c. average product of 6 workers is 70 units.
d. the average product of 5 workers is 100 units.

In principle, socialism is:
a. less concerned about fairness than capitalism.
b. just as concerned about fairness as capitalism.
c. more concerned about fairness than capitalism.
d. not concerned about fairness at all.

Market failures:
a. can always be corrected through government action.
b. can never be corrected through government action.
c. are sometimes made worse by government failures.
d. lead to a desired allocation of resources.

Suppose a perfectly competitive firm's marginal revenue is \$10 while its marginal cost is \$11. Under these circumstances the firm:
a. is maximizing profit and should not change output.
b. is not maximizing profit and should increase output.
c. is not maximizing profit and should reduce output.
d. needs to know the market price before it can determine whether it is maximizing profit.

Mexico has a comparative advantage in producing corn:
a. if its opportunity cost of producing corn is higher than the opportunity cost in other countries.
b. if its opportunity cost of producing corn is the same as the opportunity cost in other countries.
C. if its opportunity cost of producing corn is lower than the opportunity cost in other countries.
d. regardless of the opportunity cost in other countries.

Taxes:
a. cause market shortages.
b. cause the equilibrium quantity to increase.
c. create a wedge between the price consumers pay and the price suppliers receive.
d. cause the price consumers pay to equal the price suppliers receive.

The general term meaning the act of combining two firms is known as:
a. a merger.
b. an acquisition.
c. a takeover.
d. green mail.

A merger between a textile mill and a clothing manufacturing company would be considered a:
a. horizontal merger.
b. vertical merger.
c. conglomerate merger.
d. diagonal merger.

The price of gasoline is generally higher in Hawaii than in the continental United States. In 2002 the Hawaiian legislature passed a law forbidding gas stations from charging a price higher than the average price of gas in the West Coast of the United States. As time progresses, one would expect the resulting:
a. surplus of gas in Hawaii to rise.
b. surplus of gas in Hawaii to fall.
c. shortage of gas in Hawaii to rise.
d. shortage of gas in Hawaii to fall.

If a corrective tax on gasoline results in the efficient output of gasoline by internalizing negative externalities associated with pollution:
a. pollution from gasoline will increase because people are also harmed by the tax.
b. there will be no effect on pollution from gasoline because the tax is paid by the supplier.
c. pollution from gasoline will be zero because environmental cleanliness is priceless.
d. the tax will generate enough revenue to compensate society for the damages resulting from the pollution that still occurs.

Suppliers would be the most eager to organize to restrict output if they faced:
a. an inelastic demand.
b. an elastic demand.
c. a unit elastic demand.
d. a perfectly elastic demand.

Assuming government's goal is to benefit society as much as possible:
a. actions with negative and positive externalities should be encouraged.
b. actions with negative and positive externalities should be restricted.
c. actions with negative externalities should be encouraged and actions with positive externalities should be restricted.
d. actions with negative externalities should be restricted and actions with positive externalities should be encouraged.

A natural monopoly:
a. has an average total cost curve that reaches minimum possible average total cost at a low level of output.
b. is usually subject to antitrust suits.
c. is usually allowed to choose its price so as to maximize profits in the United States.
d. occurs when a single firm can supply the entire market demand for a product at a lower average total cost than would be possible if two or more firms supplied the market.

Under monopolistic competition, there are:
a. few barriers to entry.
b. only a small number of sellers in the market.
c. significant barriers to entry.
d. only a few buyers in the market.

In 2004, Wendy's began to offer fruit or salad as a substitute for French fries in its value meals. It made sense for Wendy's to advertise this fact as long as doing so:
a. raised revenue by more than it raises cost of advertising.
b. raised any revenue at all.
c. did raise costs.
d. raised revenue by less than the cost of advertising.

Monopolistically competitive firms:
a. can earn economic profits or losses in both the short-run and the long-run.
b. can earn either profits or losses in the short-run, but earn zero economic profits in the long-run.
c. earn economic profits in the short-run but zero economic profits in the long-run.
d. earn zero economic profits in both the short-run and the long-run.

The more inelastic is demand the:
a. more sellers have to gain by restricting supply to raise price and total revenue.
b. less sellers have to gain by restricting supply to raise price and total revenue.
c. more sellers have to gain by raising supply to lower price and raise total revenue.
d. smaller will be the effect on total revenue of a change in price.

A cartel:
a. lets individual member firms determine prices and output.
b. often acts like a monopolist.
c. is combination of firms in which the firms have merged.
d. produces at the competitive market output level.

Which of the following methods of reducing the amount of trash society generates is most likely to be efficient?
a. A mandatory recycling program
b. A completely voluntary recycling program
c. A "trash tax"
d. Landfills and incinerators

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