Hence, e > 1 and MR is positive. Further, at all the points on the demand curve between ‘S’ and ‘C’ (for a greater quantity than OQ) numerator point is less than the denominator. So, e

In extreme case, when the elasticity of demand is zero, AR is equal to zero while MR is equal to minus infinity and so the gap between the two is maximum. When the elasticity of

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the elasticity of demand increases, MR and AR curves becomes closer and closer to each other.

The gap between them reduces to zero under perfect competition, when the demand curve is perfectly elastic.

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