Refer to the information provided in Figure 13.3 below to answer the questions that follow. Figure 13.3
-Refer to Figure 13.3. This firm's total revenue will be maximized at a price of
A) $8.
B) $6.
C) $5.
D) $4.

Question

Refer to the information provided in Figure 13.3 below to answer the questions that follow.  Figure 13.3
-Refer to Figure 13.3. This firm's total revenue will be maximized at a price of
A) $8. 
B) $6. 
C) $5. 
D) $4.

Quizplus · Accepted Answer

The firm's total revenue is maximized where the elasticities of demand and supply are equal, at the price of $5. At this price, the firm can sell 10 units and will earn a total revenue of $50. Any increase in price will result in a decrease in quantity demanded greater than the increase in price, leading to a decrease in total revenue, and any decrease in price will lead to an increase in quantity demanded greater than the decrease in price, also leading to a decrease in total revenue.

Refer to the Information Provided in Figure 13