If the average revenue is 45 and elasticity of demand is 5 then marginal revenues is….…

Answer

To find the marginal revenue (MR) given the average revenue (AR) and the elasticity of demand (η), we can use the following formula:

\[ MR = AR \left(1 - \frac{1}{\eta}\right) \]

**Step 1: Identify the given values.**
- Average Revenue (AR) = 45
- Elasticity of Demand (η) = 5

**Step 2: Substitute the values into the formula.**
Using the formula for marginal revenue:
\[ MR = 45 \left(1 - \frac{1}{5}\right) \]

**Step 3: Calculate the term inside the parentheses.**
First, calculate \( \frac{1}{5} \):
\[ \frac{1}{5} = 0.2 \]

Now, substitute this back into the equation:
\[ MR = 45 \left(1 - 0.2\right) \]
\[ MR = 45 \left(0.8\right) \]

**Step 4: Perform the multiplication.**
Now multiply:
\[ MR = 45 \times 0.8 = 36 \]

**Final Answer:**
Thus, the marginal revenue (MR) is 36.

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