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Nidhi taparia
The correct answer is (2) relatively inelastic. This question can be solved using the geometric method of calculating elasticity. When MR is negative, demand or AR curve is below its middle point. To calculate elasticity by geometric method at such a point, E = lower portion / upper portion Since this is the lower end of AR curve, lower portion < upper portion or lower portion / upper portion < 1 Hence E < 1 or the curve is relatively inelastic at that point where MR < 0.