The correct answer is: Both 1 and 2.
Explanation:
Total revenue (TR) is the total amount of money that a company receives from selling its goods or services. Marginal revenue (MR) is the additional revenue that a company receives from selling one more unit of its goods or services.
When MR is negative, it means that the company is losing money by selling one more unit of its goods or services. This is because the cost of producing the additional unit is greater than the revenue that the company receives from selling it.
When MR is zero, it means that the company is neither making nor losing money by selling one more unit of its goods or services. This is because the cost of producing the additional unit is equal to the revenue that the company receives from selling it.
When MR is positive, it means that the company is making money by selling one more unit of its goods or services. This is because the revenue that the company receives from selling the additional unit is greater than the cost of producing it.
Therefore, TR starts declining when MR is negative. This is because when MR is negative, the company is losing money by selling one more unit of its goods or services. As a result, the total amount of money that the company receives from selling its goods or services will start to decline.
MR can be zero or even negative. This is because the cost of producing a good or service can sometimes be greater than the revenue that the company receives from selling it. In this case, the company will lose money by selling the good or service.
TR stops increasing when MR = 0. This is because when MR is zero, the company is neither making nor losing money by selling one more unit of its goods or services. As a result, the total amount of money that the company receives from selling its goods or services will not increase any further.