Relationship among MR, AR and $\eta_d$ is : (a) $MR = AR = \eta_d$ (b) $\eta_d = \dfrac{AR}{AR - MR}$ (c) $AR = \dfrac{MR}{\eta_d}$ (d) $\eta_d = AR - MR$

Relationship among MR, AR and etad is : (a) MR = A – Class 11 Business Mathematics Statistics

Question 19 of 35

\eta_d

(a)

MR = AR = \eta_d

(b)

\eta_d = \dfrac{AR}{AR - MR}

(c)

AR = \dfrac{MR}{\eta_d}

(d)

\eta_d = AR - MR

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From $MR=AR\left(1-\tfrac1{\eta_d}\right)$ , solving for $\eta_d$ yields $\eta_d=\dfrac{AR}{AR-MR}$ .

The standard relationship between marginal revenue $(MR)$ , average revenue $(AR)$ and price elasticity of demand $(\eta_d)$ is

$MR = AR\left(1 - \frac{1}{\eta_d}\right)$

Rearrange to isolate $\eta_d$ :

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