Introduction to Economics 1 Deneme Sınavı Sorusu #1372394
Where does a firm achieves the maximum revenue?
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At the point where total revenue is less than marginal cost. |
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At the point where the demand is unit elastic with respect to price. |
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At the point where total revenue is greater than marginal cost. |
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At the point where the cross price elasticity for the demand is negative. |
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At ht epos where marina cost is zero. |
In order to increase the total revenue, a firm must decrease the price in the elastic portion of the demand curve and increase the price in the inelastic portion of the demand curve. For the sake of completeness, we should note that a firm achieves the maximum revenue where the demand is unit elastic with respect to price. This is also the point at which the ratio of change in total revenue to a small change in quantity, i.e. marginal revenue, is equal to zero.
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