Questions: e.com/courses/9262/quizzes/29438/take/questions/702707 N1203-O001 Principles of M You started this quiz near when it was due, so you won't have the full amount of time to take the quiz. The Final Exam Started: Jan 3 at 11:10pm Quiz Instructions Question 27 If marginal revenue slopes downward, which of the following is true? The firm must decrease its price to sell a larger quantity. The firm must decrease its price if it wants to continue selling the same quantity. The firm is unable to adjust price when the quantity sold changes. The firm must increase its price to sell a larger quantity. Previous Not saved Search

e.com/courses/9262/quizzes/29438/take/questions/702707 N1203-O001 Principles of M You started this quiz near when it was due, so you won't have the full amount of time to take the quiz. The Final Exam Started: Jan 3 at 11:10pm Quiz Instructions Question 27 If marginal revenue slopes downward, which of the following is true? The firm must decrease its price to sell a larger quantity. The firm must decrease its price if it wants to continue selling the same quantity. The firm is unable to adjust price when the quantity sold changes. The firm must increase its price to sell a larger quantity. Previous Not saved Search
Transcript text: e.com/courses/9262/quizzes/29438/take/questions/702707 N1203-O001 Principles of M You started this quiz near when it was due, so you won't have the full amount of time to take the quiz. The Final Exam Started: Jan 3 at 11:10pm Quiz Instructions Question 27 If marginal revenue slopes downward, which of the following is true? The firm must decrease its price to sell a larger quantity. The firm must decrease its price if it wants to continue selling the same quantity. The firm is unable to adjust price when the quantity sold changes. The firm must increase its price to sell a larger quantity. Previous Not saved Search
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Solution

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The answer is the first one: the firm must decrease its price to sell a larger quantity.

Explanation for each option:

  1. The firm must decrease its price to sell a larger quantity.

    • Correct. When marginal revenue slopes downward, it indicates that the firm is operating in a market where it has some degree of market power, such as a monopolistic or imperfectly competitive market. In such markets, to sell additional units, the firm must lower its price.

  2. The firm must decrease its price if it wants to continue selling the same quantity.

    • Incorrect. This statement is not necessarily true. If the firm wants to continue selling the same quantity, it does not need to change its price. The price adjustment is required only if the firm wants to sell a larger quantity.

  3. The firm is unable to adjust price when the quantity sold changes.

    • Incorrect. This statement is false because the firm can adjust its price when the quantity sold changes. In fact, the downward-sloping marginal revenue curve implies that the firm does adjust its price to sell different quantities.

  4. The firm must increase its price to sell a larger quantity.

    • Incorrect. This statement is the opposite of what is true. To sell a larger quantity, the firm must decrease its price, not increase it.

Summary: The correct answer is that the firm must decrease its price to sell a larger quantity. This is consistent with the concept of a downward-sloping marginal revenue curve in markets where firms have some pricing power.

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