The demand curve facing Company ABC is perfectly elastic.What is its marginal revenue?
A)Equal to the average revenue
B)Less than the price
C)Higher than the price
D)Higher than the average revenue

Question

Quizplus · Accepted Answer

When the demand curve is perfectly elastic, the price remains constant regardless of the quantity sold, meaning the marginal revenue (the additional revenue from selling one more unit) is equal to the price, which is also the average revenue.

The Demand Curve Facing Company ABC Is Perfectly Elastic