On a downward-sloping linear demand curve,total revenue reaches its maximum value at the
A)midpoint of the demand curve.
B)lower end of the demand curve.
C)upper end of the demand curve.
D)It is impossible to tell without knowing prices and quantities demanded.

Question

Quizplus · Accepted Answer

Total revenue is calculated as the product of price and quantity sold. At the midpoint of the demand curve, the price and quantity sold are such that the product is maximized. Any increase or decrease in price or quantity sold will result in a decrease in total revenue. Therefore, the maximum total revenue occurs at the midpoint of the demand curve.

On a Downward-Sloping Linear Demand Curve,total Revenue Reaches Its Maximum