A. Demand is elastic (at all prices). B. Demand is inelastic (at all prices). Your answer is not correct.C. Demand is elasti
c at all prices above $7.00 and inelastic at all prices below $7.00. This is the correct answer.D. Demand is elastic at all prices above $5.00 and inelastic at all prices below $5.00. E. Demand is inelastic at all prices above $7.00 and elastic at all prices below $7.00. At what price is total revenue maximized? Total revenue is maximized when price equals $ nothing. (Enter your response as a real number rounded to two decimal places.)
1 answer:
This question requires a graph which was not provided. I obtained the graph from google. It can be found in the attachment below.
Answer:
a. Demand is elastic at all prices above $7.00 and inelastic at all prices below $7.00 - option C.
b. Total revenue is maximized when elasticity is equal to one, thus when price equals $7.
Explanation:
a. In a case where demand is elastic, an increase in price leads to a decrease in total revenue. However, when demand is inelastic, an increase in price leads to an increase in total revenue.
Thus, demand is elastic at all prices above $7.00 and inelastic at all prices below $7.00. - option C.
b. Total revenue is maximized when elasticity is equal to one, thus when price equals $7.
Price Quantity Total revenue
0 0 0
2 8 16
4 7 28
6 6 36
8 5 40
10 4 40
12 3 36
14 2 28
16 1 16
18 0 0
You might be interested in