Q.'When Marginal Revenue (MR) is zero, Total Revenue (TR) is at its maximum.' Is this statement true? Explain with reference to the behaviour of TR as output increases.

MR measures how much TR changes with each extra unit sold, so the sign of MR at any output tells us directly whether TR is still climbing, has topped out, or is falling back. …

The statement is true, and it follows directly from what MR measures. $MR = ΔTR/ΔQ$ — it is the addition to TR from selling one more unit.

As long as MR is positive, each extra unit sold adds something positive to TR, so TR must still be rising. Once output reaches the level where MR becomes exactly zero, the next unit adds nothing further to TR — TR has stopped rising, which means it has reached its highest (maximum) value at that output. If output is pushed beyond this point, MR turns negative, meaning each further unit actually reduces TR (this typically happens when a firm must cut price so much to sell the extra unit that the loss in revenue on all the earlier units outweighs the gain from the one new unit) — so TR falls back down after its peak. …

A common confusion is thinking TR is maximum when AR (price) is highest — in fact price is generally highest at the very lowest output level (under a downward-sloping demand curve) where TR itself is still small; TR's own …