Given a linear demand curve, at which combination of price and marginal revenue ( P, MR)is the price elasticity of demand less than 1?
A)P = 15, MR = -4
B)P = 20, MR = 0
C)P = 28, MR = 13
D)P = 22, MR = 9

Question

Quizplus · Accepted Answer

For a linear demand curve, the price elasticity of demand is less than 1 (inelastic) when marginal revenue (MR) is negative. This is because the price elasticity of demand formula for a linear demand curve is 1 + (MR/P), and for elasticity to be less than 1, MR needs to be negative. Among the given options, only A) P = 15, MR = -4 meets this criterion.

Given a Linear Demand Curve, at Which Combination of Price