Assume a firm's objective is to maximize its revenue, then the firm should produce at a point on its demand curve where:

a. elasticity is 0

b. elasticity is infinite

c. elasticity is > 0 but<1

d. elasticity is unitary

e. none of the above

Solutions

Expert Solution

The correct answer is OPTION D

The firm's objective is to maximize its revenue, then the firm should produce at a point on its demand curve where elasticity is unitary.

Reason:

Increments in cost will offset the decrease in number of units sold, yet increment your total revenue. If elasticity is 1, the total revenue is already maximized, and you would prompt that the organization keep up its present value level.

Rahul Sunny answered 1 year ago

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