course hero for a monopolist with a linear demand curve, total revenue is maximum when:

Because a monopolist must cut the price of every unit in order to increase sales, total revenue does not always increase as output rises. In this case, total revenue reaches a maximum of $25 when 5 units are sold. Beyond 5 units, total revenue begins to decline. Figure 10.4 Demand, Elasticity, and Total Revenue

Full Answer

Where is total revenue maximized on a linear demand curve?

The correct answer is B. where the elasticity is -1. In a linear demand curve, total revenue is maximized where elasticity is less than one.

What is the total revenue curve for a monopolist?

TOTAL REVENUE CURVE, MONOPOLY: A curve that graphically represents the relation between the total revenue received by a monopoly firm for selling its output and the quantity of output sold. It is combined with a monopoly firm's total cost curve to determine economic profit and the profit maximizing level of production.

What happens along a linear demand curve?

On a linear demand curve, the price elasticity of demand varies depending on the interval over which we are measuring it. For any linear demand curve, the absolute value of the price elasticity of demand will fall as we move down and to the right along the curve.

What term is used to describe quantities demanded that do not change much in response to a change in price?

Perfectly Inelastic Demand: When demand is perfectly inelastic, quantity demanded for a good does not change in response to a change in price.

What is total revenue curve?

Total revenue changes with respect to price, and quantity can be visually demonstrated on a graph, in which a demand curve is drawn, that signals the price and quantity that would maximize total revenue. To calculate marginal revenue, divide the change in total revenue by the change in the quantity sold.

How do you find total revenue for a monopoly?

The total revenue is found by multiplying the price of one unit sold by the total quantity sold. For example, if the price of a good is $10 and a monopolist sells 100 units of a product per day, its total revenue is $1,000.

What is linear demand curve?

A linear demand curve is a line representing the relationship between the demand for a product or service and its price. Everyone knows that sales are proportional to price: The more you charge for an item, the fewer you can expect to sell.

How does total revenue change as one moves down a linear demand curve?

How does total revenue change as one moves down a linear demand curve? It first increases, then decreases.

When a demand curve is linear and downward sloping?

The elasticity of demand is an important concept in economics that tells us how much the consumers are responsive to a change in the price of a particular product. On a linear demand curve, the slope remains the same, but the elasticity changes as we move upwards and downwards along the demand curve.

What change is graphically represented as movement along the demand curve?

An increase in quantity demanded is caused by a decrease in the price of the product (and vice versa). A demand curve illustrates the quantity demanded and any price offered on the market. A change in quantity demanded is represented as a movement along a demand curve.

What curve does a demand illustrate?

demand curve, in economics, a graphic representation of the relationship between product price and the quantity of the product demanded. It is drawn with price on the vertical axis of the graph and quantity demanded on the horizontal axis.

Which of the following changes would not shift the demand curve for a good or service?

The correct option is: b. a change in the price of the good or service.