Find the margmal revenue of a firm that sells a product at a price of Rs. IO and the price elasticity…
The relationship between Marginal Revenue (MR), Price (P), and Price Elasticity of Demand (e) is given by MR = P * [1 - (1 / |e|)]. Substituting P = Rs. 10 and |e| = 2 gives…
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Find the margmal revenue of a firm that sells a product at a price of Rs. IO and the price elasticity of demand for the product is (-)2.
Answer and explanation
Correct answer A
The relationship between Marginal Revenue (MR), Price (P), and Price Elasticity of Demand (e) is given by MR = P * [1 - (1 / |e|)]. Substituting P = Rs. 10 and |e| = 2 gives MR = 10 * [1 - (1 / 2)] = 10 * 0.5 = Rs. 5.
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UGC NET Commerce