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Question

Comment on the shape of the MR curve in case the TR curve is a

(i) positively sloped straight line, passing through the origin

(ii) horizontal straight line.


Solution

(i) MR is falling but positive when TR is positively sloped straight line. Rising TR implies that quantity demanded rises in greater proportion to fall in price.

(ii) MR is zero when TR is a horizontal line. Horizontal TR implies that quantity demanded rises in the same proportion to fall in price.

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