What price maximizes the firm's total revenues? What is the elasticity of demand at this point on...
Question:
[{Image src='diagram1863399545121985738.png' alt='' caption=''}]
What price maximizes the firm's total revenues?
What is the elasticity of demand at this point on the demand curve?
Elasticity of Demand
The revneue of a product is equal to price times the number of units sold. The revenue has a close relationship with the price elasticity of demand.
Answer and Explanation: 1
The revneue is maximized at both $8 and $6 with the revenue at these prices being equal to $24.
At the price at which revenue is maximized the demand is always unit elastic.
Learn more about this topic:
Get access to this video and our entire Q&A library
Price Elasticity of Demand: Definition, Formula & Example
from
Chapter 3 / Lesson 54Learn what price elasticity is. Discover how to find price elasticity of demand, study examples of price elasticity, and examine a price elasticity graph.
Explore our homework questions and answers library
Browse
by subject