Marginal revenue and elasticity:
A)are positively related.
B)are related only when the demand curve is linear.
C)are unrelated.
D)are inversely related.

Question

Quizplus · Accepted Answer

Marginal revenue is the change in total revenue resulting from a one-unit increase in output. Elasticity is a measure of the responsiveness of quantity demanded to a change in price. When demand is elastic, a small change in price will lead to a large change in quantity demanded. In this case, marginal revenue will be positive because an increase in output will lead to a more than proportionate increase in total revenue.

Marginal Revenue and Elasticity