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Figure: The Linear Demand Curve
-(Figure: The Linear Demand Curve) Look at the figure The Linear Demand Curve. As a producer, you are interested in maximizing your total revenues in this market. At what price should you sell your good? What is the corresponding total revenue?
A) $10; $100
B) $20; $200
C) $0; $100
D) $5; $100

Question

Use the following to answer questions:
Figure: The Linear Demand Curve 
-(Figure: The Linear Demand Curve) Look at the figure The Linear Demand Curve. As a producer, you are interested in maximizing your total revenues in this market. At what price should you sell your good? What is the corresponding total revenue?
A) $10; $100 
B) $20; $200 
C) $0; $100 
D) $5; $100

Quizplus · Accepted Answer

To maximize total revenue on a linear demand curve, the price should be set at the midpoint of the demand curve. In this case, the midpoint price is $10, which corresponds to a total revenue of $100.

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