Economics · Elasticity of Demand

Which one of the following relationships between Elasticity of Demand (Ed), Marginal Revenue (MR), and Average Revenue (AR) is NOT correct?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1Ed is highly elastic in the range of positive average revenue regardless of MR.✓
2Demand is inelastic (Ed < 1) in the range where marginal revenue is negative.
3Ed > 1 when MR is positive.
4Elasticity of demand is unity (Ed = 1) when marginal revenue (MR) is zero.

Correct answer

Ed is highly elastic in the range of positive average revenue regardless of MR.

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