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    A manufacturer of high-grade flat glass enjoys monopoly power and operates at a profit-maximising level of output. Which of the following statements must be true?

    a) Marginal revenue is positive
    b) Raising output will reduce the manufacturer’s total revenue.
    c) Marginal revenue is negative.
    d) Demand is price inelastic.
    e) Marginal cost will be above average cost at this level of output.
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    Have narrowed it down to the first 3, but help would be much appreciated
    Thanks
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    (Original post by Mr Shankly)
    Have narrowed it down to the first 3, but help would be much appreciated
    Thanks
    Is this ocr unit 3 A2 economics?
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    (Original post by helpneeded-a)
    Is this ocr unit 3 A2 economics?
    No, Edexcel.
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    I think it's A.

    Firm will operate where MR=MC. Marginal cost can't be negative as you'll always be paying something to produce one unit however small therefore MR can not be negative and must therefore be positive. Not B as total revenue would start to recude when MR becomes negative and this would not happen at profit maximising level of output.

    Hopefully that makes sense =]
 
 
 
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