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Anuta_ua [19.1K]
3 years ago
7

Imagine a linear demand curve graphed with Quantity on the x-axis and Price on the y-axis. We know the middle of the curve is th

e unit elastic point. Why is this point signifcant?
a. That's the point where total revenue is maximized ?
b. That's the point where consumers will not respond at all to a change in price
c. That's the point where consumers are completely responsive to a change in price
d. More than one answer is correct
Business
1 answer:
Murrr4er [49]3 years ago
3 0

Answer:

A. That's the point where total revenue is maximized

Explanation:

Demand Curve is a downward sloping curve representing inverse  relationship between price & quantity demanded.

Elasticity of Demand is the responsiveness of quantity demanded to price change. It can be measured geometrically on a demand curve point by :

Demand curve segment below the point / Demand curve segment above the point.

This way the elasticity keeps on decreasing as we move downwards on the demand curve [Ed=∞ to Ed >1 to Ed = 1 to Ed < 1 to Ed = 0] i.e [from perfectly elastic to elastic to unitary elastic to inelastic to perfectly inelastic demand].

If Demand is Elastic [Ed >1] : There is negative relationship between price and Total Revenue. This point is on the upper segment of demand curve as per geometric method, P- TR negative relationship implies that TR can be increased by decreasing Price.

If Demand is Inelastic [Ed <1] : There is positive relationship between price &total revenue. This point is on the lower segment of demand curve as per geometric method, P-TR positive relationship implies that TR can be increased by increasing price.

So: The best Total Revenue Maximising point is on the middle of demand curve where demand is unitary elastic [Ed=1] - as any other deviation from this point would create an incentive to change price to generate higher revenue.

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Questions

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Answer:

Net advantage from further processing  $1,200<u> </u>

Explanation:

A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.  

Also note that all the joint costs incurred up to the split-off point are irrelevant to the decision to process further any of the .

Net monetary advantage of product X

                                                                                              $

Sales revenue after the split-off point                          44,800

Sales revenue at the split-off point                             <u>  (32,000)</u>

Additional sales revenue                                                  12,800

Further processing cost                                                    <u>(11,600)</u>

Net advantage from further processing                         <u>     1,200 </u>

Net advantage from further processing  $1,200<u> </u>

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Answer:

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Answer:

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a) Data and Analysis:

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Cash                             $4,200

Accounts receivable      $300

Accounts payable                                  $1,100

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Advertising expense  $8,100

Travel expense         $4,200

Shipping expense       $300

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software expense     $400

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Cash                             $4,200

Accounts receivable      $300

Liabilities and Equity:

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H. Jones, Capital       $4,400

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