If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic,its marginal revenue for ham and eggs is
A) negative.
B) positive.
C) zero.
D) maximized.
E) undefined.

Question

Quizplus · Accepted Answer

When demand is unit elastic, marginal revenue is zero. This is because any increase in price would cause a proportional decrease in quantity demanded, resulting in no change in total revenue. Therefore, to maximize profit, the restaurant should continue charging the current price as any increase in price would result in a decrease in total revenue.

If the Single Restaurant in an Eastern Kentucky Town Is