Question

Q.No: 36
Calculate Price if, Marginal Revenue is 5
and elasticity of demand is .75?
A) 5
B) 20
C) 18
D) 10​

Answer 1

Answer:

c answer is correct dear

Explanation:

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Answer 2

None of the given options is correct.

If, Marginal Revenue is 5 and elasticity of demand is .75 the price will be -15

Using the following formula-

MR = P[1-(1/Ep)]

⇒5 = P [1- (1/0.75)]

⇒5 = P [0.75 -1/ 0.75]

⇒5 = P [-0.25/0.75]

⇒ (5*0.75)/-0.25= P

⇒-15 = P

Negative price can be due to two reasons-

• decrease in supply
• increase in demand