The correct answer is: C. Equal to one.
Marginal revenue is the additional revenue that a firm earns from selling one more unit of a good or service. It is calculated by taking the change in total revenue and dividing it by the change in quantity sold.
The price elasticity of demand is a measure of how responsive consumers are to changes in price. It is calculated by taking the percentage change in quantity demanded and dividing it by the percentage change in price.
When the price elasticity of demand is unity, the marginal revenue is equal to the price. This is because a one-unit increase in price will result in a one-unit decrease in quantity demanded, so the firm will earn the same amount of revenue from selling one more unit of the good or service.
If the price elasticity of demand is less than unity, the marginal revenue will be less than the price. This is because a one-unit increase in price will result in a less than one-unit decrease in quantity demanded, so the firm will earn less revenue from selling one more unit of the good or service.
If the price elasticity of demand is greater than unity, the marginal revenue will be greater than the price. This is because a one-unit increase in price will result in a more than one-unit decrease in quantity demanded, so the firm will earn more revenue from selling one more unit of the good or service.