## (Solution Download) 1 Demand is on the upper portion of a linear

1. Demand is ____on the upper portion of a linear demand curve and ____on the lower portion of a linear demand curve.
2. Suppose we are on the upper portion of a linear demand curve. If the price increases by 10 percent, the quantity demanded will decrease by ____ (more/less) than 10 percent and total revenue will ____ (increase/decrease).
3. At the midpoint of a linear demand curve, the price elasticity of demand is____.
4. If we are on the lower part of a linear demand curve, a decrease in price ____ (increases/decreases) total revenue.
5. Maximizing Revenue from Wilderness Passes. Your state issues wilderness passes to people who hike, bike, and ski in wilderness areas. Its objective is to maximize the total revenue from the passes. The current price is \$30. The demand for wilderness passes is linear, and a price of \$90 would drive the quantity demanded to zero. What is the appropriate price? Illustrate with a complete graph.
6. Where on the Demand Curve? The demand curve for your firms product is linear. Based on recent sales data, you have determined that at the current price, the price elasticity of demand is 0.80.
a. Is the current price on the upper or lower portion of the demand curve?
b. If you want to increase your total revenue, should you increase or decrease your price?
c. Will you move upward or downward along the demand curve?

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