Question

If the average revenue is 45 and elasticity of demand is 3 then marginal revenue is ______.

Answer 1

If the average revenue is 45 and elasticity of demand is 3 then marginal revenue is 30.

Explanation:

Given:

Average Revenue (AR): 45

Elasticity of Demand (e_d): 3

MR = AR × `(1 - 1/e_d)` 

= `45 xx (1 - 1/3)`

= `45 xx (2/3)`

= `90/3` 

MR = 30