Marginal revenue - Positive, negative, or zero?

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• Short-Run Profit maximization

  Price (P) > Marginal Cost(MC)
  3. Positive, Negative, or zero Short-Run Profits.
  
  Oligopoly
  ---------
  
  1. Marginal Revenue (MR) = Marginal Cost(MC)
  2. Price (P) > Marginal Cost(MC)
  3.

• the law of diminishing marginal returns

  There are two points when the marginal profit is zero, however, the manager continues till that point when the manager has collected the positive profit. He does not collect negative marginal revenue!

• Practice Problems Multiple Choice

  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.

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  Upward curves have a positive second derivative, while downward curves have a negative second derivative.

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  For a resource constraint, either its slack value must be _____ or its shadow price must be ________ a. negative, negative b. negative, zero c. zero, zero d. zero, negative D 7.

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  c) Total revenue is maximized when MR becomes negative. This occcurs at an output of 8. d) Total revenue increases at a slower rate until it is zero.

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  While it is true that monopolies may produce where marginal revenue is positive, when marginal revenue is zero does not imply zero profits. In perfect competition, the price and the marginal revenue are equal.

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  In this example we are told that Marginal Cost is equal to zero. In the diagram, the Marginal Cost (MC) curve would lie along the x-axis. Marginal Revenue equals Marginal Cost when Marginal Revenue is equal to zero.

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  In the long run a purely competitive firm will earn (negative, positive, zero) _________________ economic profits.