Refer to the following figure: -At a price of $10, the point elasticity of demand for D₃ is ________ and marginal revenue is _______. A) -5; positive B) -0.5; negative C) -0.2; negative D) -1; zero

Question

Quizplus · Accepted Answer

When the point elasticity of demand is -5, it indicates that demand is elastic, meaning a 1% decrease in price leads to a 5% increase in quantity demanded. In such cases, marginal revenue is positive because the increase in quantity sold more than compensates for the lower price.

Refer to the Following Figure