+2 votes
in Class 12 by kratos

What would be the shape of the demand curve so that the total revenue curve is
(a) a positively sloped straight line passing through the origin?
(b) a horizontal line?

1 Answer

+5 votes
by kratos
 
Best answer

(a) If the total revenue curve is a positively sloped straight line passing through the origin, then the slope of the demand curve will be a horizontal line parallel to the x-axis. This happens when prices are constant.

(b) If the total revenue curve is a horizontal line, then the demand curve will be downward sloping. Firms can increase their volume by decreasing the price i.e., AR falls with increase in sales

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