Under monopoly MR can be negative only when ........

Under monopoly MR can be negative only when :

AR is increasing

AR is decreasing

AR is constant

AR = O

- In a monopoly, Marginal Revenue (MR) can become negative when the firm is reducing prices faster than it gains in sales volume.

- Option 1: AR is increasing. This would mean the average revenue is rising with every additional unit sold, which implies MR cannot be negative.

- Option 2: AR is decreasing. Correct! When AR is decreasing, each additional unit sold brings in less revenue, which can lead to negative MR.

- Option 3: AR is constant. When AR is constant, MR equals AR, making it impossible for MR to be negative.

- Option 4: AR = 0. This doesn't directly imply MR is negative; it's an unrelated statement to MR's negativity.

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