Question

Suppose the total-revenue curve is derived from a particular linear demand curve. What must be the nature of that demand curve?

1) Perfectly elastic
2) Perfectly inelastic
3) Unitary elastic
4) Relatively elastic
5) Relatively inelastic

Answer 1

A linear demand curve with a constant unitary elasticity is a curved line.

Step-by-step explanation:

A linear demand curve with a constant unitary elasticity is a curved line.

Constant unitary elasticity means that the percentage change in quantity demanded is the same as the percentage change in price. This indicates that the demand curve is responsive to price changes in a proportional manner.

Therefore, the nature of the demand curve derived from a linear demand curve must be unitary elastic.