Which Statement About Marginal Revenue (MR) Is NOT True

question 303

Multiple Choice

Which statement about marginal revenue (MR) is NOT true?

• A) MR is the change in total revenue divided by the change in quantity sold.
• B) MR is the total revenue divided by the quantity sold.
• C) In a perfectly competitive market, MR equals the market price.
• D) MR helps to determine the profit-maximizing output for a firm.

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Definitions:

Allowance for Doubtful Accounts

An estimate of the amount of accounts receivable that may not be collectible, recorded as a contra asset account.

Uncollectible Accounts

Accounts receivable that are considered to be uncollectable from debtors, leading to them being written off as a bad debt expense.

Net Credit Sales

Sales made on credit minus any returns or allowances, indicating the actual credit sales revenue generated during a period.

Balance Sheet Approach

A method in financial analysis that focuses on the balance sheet and its components: assets, liabilities, and equity.