Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Along a linear demand curve, total revenue is maximized A
Along a linear demand curve, total revenue is maximized
A. where the slope of a line from the origin to the demand curve is equal to the elasticity.
B. where the elasticity is -1.
C. near the quantity axis intercept.
D. near the price axis intercept.
E. where the elasticity is 0.
Answer: B
Total revenue is maximized on a linear demand curve where elasticity is -1 for two reasons:
Thus, if we know what the point where elasticity of demand is -1 is a local maximum for total revenue but it only occurs once on a linear demand curve, we know that it is a global maximum too.
