Which of the following statements are correctly explaining the relationship between the marginal revenue (MR) and price elasticity of demand?

(A). Price elasticity is less than 1 when MR is negative.
(B). Price elasticity is more than 1 when MR is negative.
(C). Price elasticity is more than 1 when MR is positive.
(D). Price elasticity is less than 1 when MR is positive.

Choose the correct answer from the options given below:

(A) and (C) only

The correct answer is Option (4) → (A) and (C) only

(A). Price elasticity is less than 1 when MR is negative. (Correct). When demand is inelastic (price elasticity < 1), a decrease in price leads to a proportionately smaller increase in quantity sold, causing total revenue to decrease. Marginal revenue is therefore negative.
(B). Price elasticity is more than 1 when MR is negative. (Incorrect) because MR is negative when elasticity is less than 1. 
(C). Price elasticity is more than 1 when MR is positive. (Correct). When demand is elastic (price elasticity > 1), a decrease in price leads to a proportionately larger increase in quantity sold, causing total revenue to increase. Marginal revenue (the change in total revenue from one more unit sold) is therefore positive.
(D). Price elasticity is less than 1 when MR is positive. (Incorrect) because MR is positive only when elasticity is more than 1.