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Calculate the price elasticity of demand if the average revenue is Rs 2500 and the marginal revenue is Rs 1500.

Sagot :

GinnyAnsweridn
Sure, let's go through the steps to calculate the price elasticity of demand given the average revenue and marginal revenue.

1. Define the given values:
- Average Revenue (AR): Rs 2500
- Marginal Revenue (MR): Rs 1500

2. Understand the formula for Price Elasticity of Demand:
The price elasticity of demand (PED) can be calculated using the formula:

[tex]\[ PED = \frac{MR}{AR} \][/tex]

3. Substitute the given values into the formula:
- MR = 1500
- AR = 2500

By substituting these values into the formula, we get:

[tex]\[ PED = \frac{1500}{2500} \][/tex]

4. Calculate the result:
Simplifying the fraction:

[tex]\[ PED = 0.6 \][/tex]

So, the price elasticity of demand is 0.6, given that the average revenue is Rs 2500 and the marginal revenue is Rs 1500.
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