Final answer:
Revenue management is not solely about marketing but involves optimizing the price and quantity of products or services sold to maximize revenue. The statement is false as it overlooks aspects like demand forecasting, pricing strategies, and data analytics that are integral to revenue management.
Step-by-step explanation:
The statement that revenue management is the use of marketing to increase the profit generated from a limited availability of supply chain assets is false. Revenue management is more accurately described as a method to optimize the revenue potential of a company by using pricing strategies, demand forecasting, and data analytics to determine the right price at the right time for the right customer in order to maximize revenue. Firms will indeed increase their profits by reducing the quantity of output until marginal revenue (MR) equals marginal cost (MC), especially if they are producing at a quantity where MC exceeds MR.
Similarly, understanding the price elasticity of demand is crucial for revenue maximization. It influences how a change in price will affect the total revenue, which is calculated as price times quantity sold. If demand is elastic, lowering the price could lead to an increase in total revenue, provided the increase in quantity sold more than compensates for the lower price.
Firms with market power, such as monopolies, operate under the context where to sell additional output, they must reduce the price which affects the marginal revenue. Thus, for these firms, the additional revenue from selling one more unit (marginal revenue) will be different from the price itself due to the downward-sloping demand curve they face.