Multiple choice

When the elasticity of demand on every point of the demand curve is equal to one, then the value of its related marginal revenue curve is

  1. equal to one

  2. less than one

  3. more than one

  4. equal to zero

  5. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If the elasticity of demand on every point of the demand curve (e) is equal to one, then M R = A R [e - 1/e] .......(i) Putting the value of e into equation (i) MR = A R [1 - 1/1] = A R [1 - 1] = A R X 0 = 0

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