Suppose that there is only one seller in the computer industry. If the demand cu

Question

Suppose that there is only one seller in the computer industry.  If the demand curve that the only seller in the industry faces a straight-line, downward sloping curve, at which point would the seller's total revenue be maximized?

A) At the midpoint of the demand curve, where elasticity is unitry.

B) At the highest point on the demand curve, where the price is the highest

C) At a point low on the demand curve, but not at the very bottom

D) At a point high on the demand curve, where elasticity is elastic.

Explanation / Answer

Revenue is maximized when the price is set at the upper half of the demand curve.

Therefore, the correct answer is option D.

further, as we go down the segment the revenue and profits decreases. At the point of intersection with the x-axis the marginal revenue earned is zero.

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