Question

In a non-competitive market, when the demand of the product increases and the product price increases _______________.

• A. the marginal revenue curve will shift to the right
• B. the marginal revenue curve will shift to the left
• C. the firm will move up the marginal revenue curve and hire fewer units of the input
• D. the firm will move down the marginal revenuencurve and hire fewer units of the input

Answer 1

Answer: (A)

the marginal revenue curve will shift to the right

The marginal revenues curve follows from the demand curve/average revenue curve (it is twice as steep as the demand curve), thus if the demand curve shifts upwards the marginal revenue curve will also shift upwards.