4. refer to figure 5 - 3. the maximum value of total revenue corresponds to a price of a. $20. b. $50. c…

Explanation:

Step1: Recall revenue formula

Revenue (R = P\times Q) (price times quantity).

Step2: Find points on demand curve

We can estimate pairs of price - quantity from the demand curve. For example, when (P = 20), (Q=40), (R = 20\times40=800); when (P = 50), (Q = 25), (R=50\times25 = 1250); when (P=70), (Q = 15), (R=70\times15=1050); when (P = 100), (Q=0), (R = 100\times0=0).

Step3: Determine maximum revenue

By calculating revenues for different price - quantity combinations, we find that the revenue is maximized when (P = 50) and (Q = 25) with (R=1250).

Answer:

b. $50