When marginal revenue is zero,demand will be:
A) elastic.
B) inelastic.
C) unit elastic.
D) There is not sufficient information to classify the elasticity of demand.

Question

Quizplus · Accepted Answer

When marginal revenue is zero, it means that any increase or decrease in production will not result in any change in total revenue. This indicates that the demand is such that the amount consumers are willing to pay for a good or service is equal to the cost of producing it. This is when demand is said to be unit elastic, where the percentage change in quantity demanded is equal to the percentage change in price.

When Marginal Revenue Is Zero,demand Will Be