Suppose that along a linear demand curve,the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units.Then the
A) total revenue is at its maximum when 100 units are produced.
B) marginal revenue is positive at 100 units.
C) marginal revenue is negative at 100 units.
D) Both answers A and B are correct.
E) Both answers A and C are correct.

Question

Quizplus · Accepted Answer

At the point where elasticity of demand is equal to 1, total revenue is maximized. Therefore, total revenue is at its maximum when 100 units are produced. Marginal revenue is zero at this point, not positive or negative.

Suppose That Along a Linear Demand Curve,the Elasticity of Demand