GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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zero
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one
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infinity
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none
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Detailed explanation-1: -When the elasticity of demand is unity, the Marginal revenue is zero. Thus because of marginal revenue which is zero, the elasticity of demand is one, this means the proportionate change in quantity demand is equal to the proportionate change in price. Was this answer helpful?
Detailed explanation-2: -Just as there is a relationship between the firm’s demand curve and the price elasticity of demand, there is a relationship between its marginal revenue curve and elasticity. Where marginal revenue is positive, demand is price elastic. Where marginal revenue is negative, demand is price inelastic.
Detailed explanation-3: -It is adequate to notice only one factor, price elasticity of demand, which is more than one when the marginal revenue has a positive value and becomes less than the units when the marginal revenue has a negative value.