Total revenue is maximized along what portion of a monopolist's demand curve?
A) The elastic portion.
B) The unitary elastic point.
C) The inelastic portion.
D) The midpoint.

Question

Total revenue is maximized along what portion of a monopolist's demand curve?
A) ​The elastic portion.
B) ​The unitary elastic point.
C) ​The inelastic portion.
D) ​The midpoint.

Quizplus · Accepted Answer

Total revenue is maximized at the point of unitary elasticity, where the price elasticity of demand is equal to -1. At this point, a 1% increase in price results in a 1% decrease in quantity demanded, which leads to no change in total revenue. This occurs at the midpoint of the demand curve, assuming a linear demand curve.

Total Revenue Is Maximized Along What Portion of a Monopolist's