For a linear demand curve, where is the amount of total expenditures on a good maximized?
What will be an ideal response?
For a linear demand curve, total expenditures are maximized at the midpoint of the demand curve. At this point, price elasticity of demand equals one. Above this point, demand is elastic, which means total expenditures increase when price falls. Below this points, demand is inelastic and total expenditures increase when price increases. Hence, expenditures are maximized when elasticity is one.
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Refer to Game Matrix II. Which outcomes in this game are Pareto optimal?
Game Matrix II
The following questions refer to the game matrix below. Player A can play the strategies "High" and "Low," and Player B can play the strategies "Odd" and "Even."
a. The upper right-hand corner only.
b. The lower right-hand corner only.
c. Both the upper and lower right-hand corners.
d. All outcomes except the upper left-hand corner.
Policy lags tend to make monetary policy ________.
A. more effective in expansions than contractions B. less effective than fiscal policy C. pro-cyclical D. more effective than initially thought
Figure 7-7
In Figure 7-7 at 100 units, FC equals
A. 1,000. B. 1,800. C. 800. D. 80.
What may limit the size of the money supply expansion to an amount less than indicated by the oversimplified deposit creation formula?