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Total Revenue Along a Linear Demand Curve quiz

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  • What is the main difference between slope and elasticity on a demand curve?
    Slope is the ratio of unit changes between two variables, while elasticity is the ratio of percentage changes.
  • How does the percentage change in price differ when increasing from \$1 to \$2 versus \$2 to \$3?
    From \$1 to \$2, the percentage change is 100%, but from \$2 to \$3, it is only 50%.
  • On a linear demand curve, where is the unit elastic point typically found?
    The unit elastic point is found at the midpoint of the demand curve.
  • What happens to total revenue as price decreases along the elastic section of a linear demand curve?
    Total revenue increases as price decreases in the elastic section.
  • What happens to total revenue as price decreases past the unit elastic point?
    Total revenue begins to decrease as price decreases past the unit elastic point.
  • How do unit changes and percentage changes behave along a linear demand curve?
    Unit changes remain constant, but percentage changes decrease as you move along the curve.
  • Which section of a linear demand curve is considered elastic?
    The section to the left of the midpoint is elastic.
  • Which section of a linear demand curve is considered inelastic?
    The section to the right of the midpoint is inelastic.
  • At what point on a linear demand curve is total revenue maximized?
    Total revenue is maximized at the unit elastic point, which is the midpoint.
  • How do you calculate total revenue from a demand schedule?
    Total revenue is calculated by multiplying price by quantity demanded.
  • Why does total revenue increase in the elastic section of the demand curve?
    Because the percentage increase in quantity demanded is greater than the percentage decrease in price.
  • Why does total revenue decrease in the inelastic section of the demand curve?
    Because the percentage decrease in price is greater than the percentage increase in quantity demanded.
  • What is the value of elasticity at the midpoint of a linear demand curve?
    Elasticity is exactly one (unit elastic) at the midpoint.
  • If the price falls and total revenue rises, what can you say about the elasticity of demand?
    Demand is elastic in that range.
  • If the price falls and total revenue falls, what can you say about the elasticity of demand?
    Demand is inelastic in that range.