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Question
What is the value of the MR when the demand curve is elastic?
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Solution
When demand curve is elastic (ed > 1), then according to the relationship `MR =P(1-1/e_d) `, the fraction `1/e_d` will be less than 1.
Hence, MR will be positive when `P (1-1/e_d)` is positive.
RELATED QUESTIONS
What would be the shape of the demand curve so that the total revenue curve is
(a) a positively sloped straight line passing through the origin?
(b) a horizontal line?
From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
|
Quantity |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
|
Marginal Revenue |
10 |
6 |
2 |
2 |
2 |
0 |
0 |
0 |
−5 |
Comment on the shape of MR curve in case when TR curve is a positively sloped straight line.
List the three different ways in which oligopoly firms may behave.
If duopoly behaviour is one that is described by Cournot, the market demand curve is given by the equation q = 200 − 4p and both the firms have zero costs, find the quantity supplied by each firm in equilibrium and the equilibrium market price.
What is meant by prices being rigid? How can oligopoly behaviour lead to such an outcome?
Comment on the shape of MR curve in case when TR curve is a horizontal straight line.
