Assume that a monopolist faces a linear demand curve and that it produces the output quantity where total revenue is maximized. At that output, the price elasticity of demand for the product is
A)greater or equal to one.
B)less than one.
C)equal to one.
D)impossible to determine.

Question

Quizplus · Accepted Answer

The price elasticity of demand at the output quantity where total revenue is maximized is equal to one. This is because at the point of maximum total revenue, any increase or decrease in price would lead to a proportional decrease or increase in quantity sold, leaving revenue unchanged.

Assume That a Monopolist Faces a Linear Demand Curve and That