For a downward-sloping demand curve, marginal revenue decreases as quantity sold increases. True or False?

I took macro but revenue should increase with the amount sold.

True. For a downward-sloping demand curve, the marginal revenue (MR) will indeed decrease as quantity sold increases.

To understand why, we need to consider the relationship between price, quantity, and revenue. Marginal revenue refers to the change in total revenue resulting from selling one additional unit of a particular good or service.

In a competitive market, firms facing a downward-sloping demand curve have to lower their prices in order to sell more units. This means that the marginal revenue obtained from selling each additional unit will be less than the price of the previous unit.

Specifically, when a firm lowers its price to sell more units, it not only gains revenue from the sale of the additional unit but also experiences a decrease in price for all the units it sells. This reduction in price leads to lower marginal revenue. Therefore, as quantity sold increases, the marginal revenue decreases along a downward-sloping demand curve.

To further illustrate this concept, one can use the following formula to calculate marginal revenue (MR):

MR = ∆TR / ∆Q

Where ∆TR represents the change in total revenue and ∆Q represents the change in quantity sold.