If a firm seeks to maximize total revenue, it should produce the quantity where:
A)marginal revenue equals zero.
B)elasticity of demand is less than one.
C)elasticity of demand is greater than one.
D)marginal revenue is maximized.
E)average total cost is minimized.

Question

Quizplus · Accepted Answer

To maximize total revenue, a firm should produce where marginal revenue equals zero, which corresponds to the point where the elasticity of demand is equal to one (unitary elasticity).

If a Firm Seeks to Maximize Total Revenue, It Should