A firm faces a demand function D(p), for which the revenue-maximizing price is $10.The demand function is altered to 2D(p).What is the new revenue-maximizing price?
A)$5
B)$20
C)$10
D)There is insufficient information to determine this.
E)none of the above.

Question

Quizplus · Accepted Answer

The revenue-maximizing price remains the same at $10 because scaling the demand function by a constant factor (in this case, doubling it) does not change the price elasticity of demand or the price at which revenue is maximized.

A Firm Faces a Demand Function D(p), for Which the Revenue-Maximizing