If the price elasticity of demand for a firm's product is -2 and the product's price is $4, then marginal revenue is equal to
A) $4.
B) $3.
C) $2.
D) $1.

Name: If the price elasticity of demand for a firm's product is -2 and the product's price is $4, then marginal revenue is equal to A) $4. B) $3. C) $2. D) $1.
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Question

Quizplus · Accepted Answer

The formula for marginal revenue (MR) when price elasticity of demand (E) is given is MR = P(1 + 1/E). Substituting the values, MR = 4(1 + 1/(-2)) = 4(1 - 0.5) = 4 * 0.5 = $2.

If the Price Elasticity of Demand for a Firm's Product