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      Question

      The price elasticity of demand is 2. If the price of the

      product is 20, what is the Marginal Revenue (MR)?
      A 10 Correct Answer Incorrect Answer
      B 20 Correct Answer Incorrect Answer
      D 40 Correct Answer Incorrect Answer

      Solution

      Use the formula MR = P * (1 - 1/e), where e is the elasticity. MR = 20 * (1 - 1/2) = 20 * 0.5 = 10.

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