The marginal revenue of a good that costs $5 and has an own- price elasticity (in absolute value)equal to 0.2 is:
A)- 20.
B)- 10.
C)10.
D)20.

Name: The marginal revenue of a good that costs $5 and has an own- price elasticity (in absolute value)equal to 0.2 is: A)- 20. B)- 10. C)10. D)20.
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Question

Quizplus · Accepted Answer

The formula for marginal revenue (MR) is MR = P(1 + 1/E), where P is the price and E is the elasticity. Here, MR = 5(1 + 1/0.2) = 5(1 - 5) = 5(-4) = -20.

The Marginal Revenue of a Good That Costs $5 and Has