Suppose a market has the demand function Qd=20-0.5P. At which of the following prices will total revenue be maximized?
A) $10
B) $20
C) $30
D) $40

Question

Quizplus · Accepted Answer

Total revenue is maximized when the price elasticity of demand is unitary. For a linear demand curve, this occurs at the midpoint of the demand curve. The demand curve intercepts the price axis at P=40, so the midpoint is at P=20.

Suppose a Market Has the Demand Function Qd=20-0