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Why profit maximized when demand is elastic and revenue is maximized when demand is unit elastic...

Why profit maximized when demand is elastic and revenue is maximized when demand is unit elastic leading the price of profit-maximizing higher than revenue-maximizing? Explain your answer by a graph.

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With elastic demand as price increases,it will reduce the quantity sold .This in turn will lead to fall in revenue.Maximum profits can be attained at a point which will be more than or equal to the price that maximizes revenue . At a point where elasticity is unit elastic, revenue is maximized. This is because if demand is elastic and price is decreased , quantity sold will increase and revenue obtained will be more than the revenue lost from low prices.Here quantity effect is more than price effect.If demand is inelastic and price increases ,quantity sold will decrease but revenue earned from higher prices will be more.Here price effect is more than quantity effect.Saturday shine Quant ceerd

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