alleryStart learning →With demand elasticity of 4, price over marginal cost is 1/(1-1/E). If MC is Rs 90, the price?
ARs 100
BRs 112
CRs 120
DRs 135
Answer & Solution
Correct answer: C. Rs 120
P/MC = 1/(1-0.25) = 4/3, so price = 90 x 4/3 = Rs 120.
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