Question

Price and marginal revenue (dollars per bottle) The graph shows Minnie's demand curve and marginal revenue curve. At what price is Minnie's total revenue maximized and over what price range is the demand for water elastic? Why will Minnie not produce a quantity at which the market demand is inelastic? a Minnie's total revenue is maximized at a price of $ bottle. 56 The demand for water from Minnie's is elastic between the prices of a bottle. O A. zero and $10 OB. $2.50 and $7.50 O C. zero and $5 O D. $5 and $10 MR Quantity (bottles of water per hour) Minnie will not produce a quantity at which the market demand for water is inelastic because when demand is inelastic she can the quantity produced, which O A. increase; increases total revenue and increases total cost, but the increase in total cost is less than the increase in total revenue OB. increase; increases total revenue, decreases total cost, and increases economic profit OC. decrease; increases total revenue, decreases total cost, and increases economic profit OD. decrease; decreases total revenue and decreases total cost, but the decrease in total cost is less than the decrease in total revenue

Answer 1

a) Minnie total revenue will maximise at the price of zero and the demand will be elastic as the price of 5 and above. The answer is "C", because the revenue maximises in the market at the price where the marginal revenue is zero. And demand is unit elastic at that point.

b) "C"

if the demand is inelastic she can decrease the total output, increase total revenue, decrease total cost and increase economic profit.