Show that if demand is elastic (say, E = −2), marginal revenue is positive but less than price. Show that if demand is unitary elastic (E = −1), marginal revenue is zero. Finally, show that if demand is inelastic (say, E = −0.5), marginal revenue is negative.

Show that if demand is elastic (say, E = −2), marginal revenue is positive but less than price. Show that if demand is unitary elastic (E = −1), marginal revenue is zero. Finally, show that if demand is inelastic (say, E = −0.5), marginal revenue is negative.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter14: Indirect Price Discrimination

Section: Chapter Questions

Problem 3MC

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