[amp_mcq option1=”$$MR = AR\\left( {1 – \\frac{1}{e}} \\right)$$” option2=”$$AR = MR\\left( {\\frac{{e – 1}}{e}} \\right)$$” option3=”$$MR = AR\\left( {\\frac{1}{{e – 1}}} \\right)$$” option4=”$$AR = \\left( {\\frac{{MR}}{e}} \\right)$$” correct=”option1″]<\/p>\n
The correct answer is: A. $$MR = AR\\left( {1 – \\frac{1}{e}} \\right)$$<\/p>\n
The formula for marginal revenue (MR) is:<\/p>\n
$$MR = \\frac{dQ}{dP} \\cdot P$$<\/p>\n
The formula for average revenue (AR) is:<\/p>\n
$$AR = \\frac{TR}{Q} = P$$<\/p>\n
The formula for elasticity of demand (e) is:<\/p>\n
$$e = \\frac{dQ}{dP} \\cdot \\frac{P}{Q}$$<\/p>\n
Therefore, the formula for MR in terms of AR and e is:<\/p>\n
$$MR = AR\\left( {1 – \\frac{1}{e}} \\right)$$<\/p>\n
Here is a brief explanation of each option:<\/p>\n
[amp_mcq option1=”$$MR = AR\\left( {1 – \\frac{1}{e}} \\right)$$” option2=”$$AR = MR\\left( {\\frac{{e – 1}}{e}} \\right)$$” option3=”$$MR = AR\\left( {\\frac{1}{{e – 1}}} \\right)$$” option4=”$$AR = \\left( {\\frac{{MR}}{e}} \\right)$$” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-47431","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n