When Marginal Revenue Is Negative for a Linear (Inverse) Demand

question 28

Multiple Choice

When marginal revenue is negative for a linear (inverse) demand function, increases in output will cause total revenues to

• A)increase.
• B)decrease.
• C)remain unchanged.
• D)there is not sufficient information to classify the elasticity of demand.

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Definitions:

Tax Revenue

Tax revenue is the income gained by governments through taxation, a primary source of income used to fund public services and obligations.

National Saving

The total amount of savings generated within a country, consisting of both private savings by households and public savings by the government.

Trillion

A numerical value represented as 1,000,000,000,000, or 10^12, often used in the context of discussing national budgets or macroeconomic figures.

Private Saving

The amount of income left after individuals have paid taxes and consumed goods and services, which can be used for investment or lending.