Explain why marginal revenue is less than price
Managerial Economics
1. Define marginal revenue. Explain why marginal revenue is less than price when demand curves slope downward.
2. In 1991, Rochester, New York, had a serious ice storm. Electric power was out in houses for days. The demand for power generators increased dramatically. Yet the local merchants did not increase their prices, even though they could have sold the units for substantially higher prices. Why do you think the merchants adopted this policy?
