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Price elasticity of demand is a way to determine marginal revenue. Optimal revenue and, more importantly, optimal profit will occur to the point when marginal revenue = marginal cost, or the price elasticity of demand < 1.
marginal revenue is negative where demand is inelastic
marginal revenue always lies behind the demand curve,and when demand increases marginal revenue also increases.demand curve is used to determine price of a commodity.
Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.
When Demand is perfectly elastic, Marginal Revenue is identical with price.
Price elasticity of demand is a way to determine marginal revenue. Optimal revenue and, more importantly, optimal profit will occur to the point when marginal revenue = marginal cost, or the price elasticity of demand < 1.
marginal revenue is negative where demand is inelastic
marginal revenue always lies behind the demand curve,and when demand increases marginal revenue also increases.demand curve is used to determine price of a commodity.
Demand is unit elastic.
Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.
When Demand is perfectly elastic, Marginal Revenue is identical with price.
Elasticity of demand influenced tax revenues
Some of the business applications are: (1) Finding the number of ouputs produced to maximize the profit. (2) Calculation of marginal revenue , marginal cost (3) Calculation of marginal average cost (4) Calculating elasticity of demand
Firms in most cases opt to select prices in the elastic regions of their demand curve. This fact explains why marginal revenue curve is always below.
Demand.
This question reflects a fundamental misunderstanding of supply and demand. Marginal revenue and average revenue are related to a firm's cost function, and are thus connected to SUPPLY. They have nothing to do with a demand curve in classical economics, which is the marginal benefit to the CONSUMER of being in the market.
Since Marginal revenue refers to the additional revenue earned by a monopolist by increasing the sale by 1 unit ( usually through lowering the price ), the additional revenue earned will always be less since there has been a drop in price.