State whether the following statement is True or False: If the marginal revenue is 50 and the price is ₹ 75, then elasticity of demand is 4 - Mathematics and Statistics

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MCQ
True or False

State whether the following statement is True or False:  

If the marginal revenue is 50 and the price is ₹ 75, then elasticity of demand is 4

Options

  • True

  • False

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Solution

False

Concept: Application of Derivatives to Economics
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Chapter 1.4: Applications of Derivatives - Q.3

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Differentiating w.r.t. x,

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∴ `("dR")/("d"x)` > 0

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Solution: Total cost C = 40 + 2x and Price p = 120 – x

p = 120 – x

∴ x = 120 – p

Differentiating w.r.t. p,

`("d"x)/("dp")` = `square`

∴ Elasticity of demand is given by η = `- "P"/x*("d"x)/("dp")`

∴ η = `square`

When p = 80, then elasticity of demand η = `square`


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