A marketing manager has just estimated that her firm's marginal revenue will become negative if a proposed price cut is made. This means that:
A. demand must be very elastic.
B. marginal cost must be negative already.
C. the firm is in pure competition.
D. more units may be sold—but total revenue will be less than it would be at the higher price.
E. None of the above—a firm's marginal revenue can't be negative.
Answer: D. more units may be sold—but total revenue will be less than it would be at the higher price.