Is it always true When demand elasticity is equal to -1 marginal revenue is equal to 0?

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1013493

2026-05-05 13:15

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Yes, when demand elasticity is equal to -1 (unitary elasticity), marginal revenue is indeed equal to 0. This occurs because, at this point, any change in quantity sold does not affect total revenue; increases or decreases in quantity will offset price changes, resulting in no net change in revenue. Thus, when elasticity is -1, the firm maximizes total revenue, leading to marginal revenue being zero.

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