Multiple Choice
-The figure above shows the demand and marginal revenue curves facing Sue's Surfboards, the sole renter of surfboards on Big Wave Island. If Sue is renting 25 surfboards an hour so that the marginal revenue is negative, then Sue's Surfboards
A) can increase its profit by increasing the number of rentals.
B) must face an inelastic demand for surfboard rentals.
C) must face a unit elastic demand for surfboard rentals.
D) must face an elastic demand for surfboard rentals.
Correct Answer:
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