To answer the question,refer to the following table showing a demand schedule: $\begin{array}{llcc}
\underline{ \text {Price } }&\underline{ \text { Ouantity } } \
&\underline{\text {demanded }} \
\$200 &1000\
150&1400\
100 &1800\
\end{array}$ If price falls from $200 to $150,
A)arrows representing the price and quantity effects both point down.
B)an arrow representing the price effect points down and is longer than an arrow for the quantity effect.
C)an arrow representing the quantity effect points up and is shorter than an arrow for the price effect.
D)arrows representing the price and quantity effects both point up.
E)total revenue moves in the same direction as the arrow representing the quantity effect.

Question

To answer the question,refer to the following table showing a demand schedule: $\begin{array}{llcc}
\underline{  \text {Price  } }&\underline{ \text { Ouantity } } \
 &\underline{\text {demanded  }} \
\$200 &1000\
150&1400\
100 &1800\
\end{array}$  If price falls from $200 to $150,
A)arrows representing the price and quantity effects both point down.
B)an arrow representing the price effect points down and is longer than an arrow for the quantity effect.
C)an arrow representing the quantity effect points up and is shorter than an arrow for the price effect.
D)arrows representing the price and quantity effects both point up.
E)total revenue moves in the same direction as the arrow representing the quantity effect.

Quizplus · Accepted Answer

When the price falls from $200 to $150, the quantity demanded increases from 1000 to 1400. This indicates that as price decreases, quantity demanded increases, which is a fundamental principle of demand. The total revenue, which is the product of price and quantity, would move in the same direction as the quantity effect because the increase in quantity demanded could offset the decrease in price, potentially leading to an increase in total revenue. Thus, the correct answer is that total revenue moves in the same direction as the arrow representing the quantity effect, which points up.

To Answer the Question,refer to the Following Table Showing a Demand