On a downward-sloping linear demand curve,where would total revenue be at a maximum
A)at the midpoint of the demand curve
B)at the lower end of the demand curve
C)at the upper end of the demand curve
D)at the point of the demand curve where the change of the price and the change of the quantity is equal

Question

Quizplus · Accepted Answer

Total revenue is maximized at the midpoint of the demand curve because at that point, the price and quantity sold are both at optimal levels, resulting in the highest possible revenue. As you move towards the upper or lower end of the demand curve, either the price or the quantity sold becomes less favorable and total revenue decreases. The point where the change in price and quantity is equal (i.e. unit elasticity) is important for determining the responsiveness of demand, but it does not necessarily correspond to a maximum revenue point.

On a Downward-Sloping Linear Demand Curve,where Would Total Revenue Be