On a straight line demand curve, total revenue is maximized where demand is unitary elastic.

Question

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Total revenue is calculated by multiplying the price of a good by the quantity sold. When demand is unitary elastic, a change in price results in an equal change in quantity demanded, resulting in no change in total revenue. Thus, total revenue is maximized at this point. On a straight line demand curve, unitary elasticity occurs at the midpoint of the curve, where the slope is equal to -1.

On a Straight Line Demand Curve, Total Revenue Is Maximized