Elasticity of demand is equal to unity while marginal revenue is

The correct answer is: A. positive.

Elasticity of demand is a measure of how responsive consumers are to changes in price. When elasticity of demand is equal to unity, it means that a 1% change in price will lead to a 1% change in quantity demanded. This is known as unitary elasticity.

When elasticity of demand is unitary, marginal revenue is positive. This is because when a firm increases its price, it will lose some customers, but it will also make more money from the customers who remain. The increase in revenue from the remaining customers will outweigh the decrease in revenue from the lost customers.

Here is a brief explanation of each option:

• Option B: zero. When elasticity of demand is zero, it means that consumers are not responsive to changes in price. A 1% change in price will lead to no change in quantity demanded. In this case, marginal revenue will also be zero. This is because the firm will not make any additional revenue from increasing its price, as it will not lose any customers.
• Option C: negative. When elasticity of demand is negative, it means that consumers are responsive to changes in price, but in the opposite direction of what we would expect. A 1% increase in price will lead to a decrease in quantity demanded of more than 1%. In this case, marginal revenue will be negative. This is because the firm will lose more revenue from the lost customers than it will make from the remaining customers.
• Option D: indeterminate. When elasticity of demand is indeterminate, it means that we cannot determine the value of marginal revenue. This can happen when there is not enough information to calculate elasticity of demand.