Question

Where along a straight-line demand curve does consumer spending reach a maximum?Explain why. What use is this information to the owner of a football club?

Answer 1

Midpoint of demand curve - the total expenditure (consumer spending) as a function of price is a parabola that reaches a max at the midpoint(demand is unit elastic at this point).

Demand is inelastic at prices below the midpoint price, and demand is elastic at prices above the midpoint price.

The owner of the football club will conduct a pricing policy depending on the elasticity of demand