Q.No : 8
The relationship between MR AR and price elasticity of demand can be represented by this formula
A) MR=1/AR (e-1/e)
B) AR=(1/MR) (e-1/e)
OC) AR=AR" (1/0)
D) MREAR (e-11e)
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Answer:
In a straight-line demand curve we know that the elasticity at the middle point is equal to one. It follows that marginal revenue corresponding to the middle point of the demand curve (or AR curve) will be equal to zero.
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