FIGURE 4- 3
-Refer to Figure 4- 3, which shows a demand shift and the short- run and long- run supply curves for some product. In the new long- run equilibrium at EL, producers' revenue
A) could be higher or lower than at ES, depending on the price elasticity of demand.
B) could be higher or lower than at E0, depending on the price elasticity of demand.
C) is unambiguously higher than at ES.
D) is unambiguously lower than at ES.
E) is unambiguously lower than at E0.

Question

FIGURE 4- 3
-Refer to Figure 4- 3, which shows a demand shift and the short- run and long- run supply curves for some product. In the new long- run equilibrium at EL, producers' revenue
A) could be higher or lower than at ES, depending on the price elasticity of demand. 
B) could be higher or lower than at E0, depending on the price elasticity of demand. 
C) is unambiguously higher than at ES. 
D) is unambiguously lower than at ES. 
E) is unambiguously lower than at E0.

Quizplus · Accepted Answer

In the new long-run equilibrium, producers' revenue could be higher or lower than at ES, depending on the price elasticity of demand, as elasticity affects how quantity demanded responds to price changes.

FIGURE 4- 3 -Refer to Figure 4- 3, Which Shows a Demand Shift