Please give answer with diagram (If possible) and full description.~ t t Q) Explain why firms will always maximise revenue by charging a price where demand is unitary elastic.I Answer:4 This can be explained by using diagrams which relate price elasticity of demand to the total revenue function, or using some mathematics: P = a - bQ, so MR = a-2bQ. If MR = 0, then a -2bQ =0, so Q = a/2b, which is halfway between 0 and the point where the AR function intercepts the Q axis. Q) Explain why firms will always maximise profit by charging a price where demand is elastic.I Answer:4 Profit maximisation requires that MC = MR (ignoring the second order condition). MC is always positive, so MR must be positive, which corresponds to the elastic section of the demand curve. ~