When marginal revenue is zero for a monopolist facing a downward-sloping, straight-line demand curve, the price elasticity of demand is:
A) greater than 1.
B) equal to 1.
C) less than 2.
D) equal to zero.

Question

Quizplus · Accepted Answer

When marginal revenue is zero for a monopolist, it means that the monopolist is producing the quantity where its total revenue is maximized. At this point, the price elasticity of demand is equal to 1, meaning that a 1% change in price results in a 1% change in quantity demanded.

When Marginal Revenue Is Zero for a Monopolist Facing a Downward-Sloping