Table 5.4 shows the price and quantity combinations for a product. The demand for the good is _____, and an increase in the price of the product from $40 to $60 per unit will _____ total revenue. Table 5.4

A)unit elastic; increase
B)elastic; decrease
C)unit elastic; not change
D)inelastic; increase
E)elastic; decrease.

Question

Table 5.4 shows the price and quantity combinations for a product. The demand for the good is _____, and an increase in the price of the product from $40 to $60 per unit will _____ total revenue.​ Table 5.4
​

A)unit elastic; increase​ 
B)elastic; decrease 
C)unit elastic; not change 
D)inelastic; increase 
E)elastic; decrease.

Quizplus · Accepted Answer

The demand for the good is elastic because the % change in quantity demanded is greater than the % change in price for each price level. An increase in price from $40 to $60 will decrease total revenue because the increase in revenue from the higher price is more than offset by the decrease in revenue from the lower quantity demanded. This is because the demand for the good is elastic, meaning consumers are sensitive to changes in price and will reduce their quantity demanded significantly in response to a price increase.

Table 54 Shows the Price and Quantity Combinations for a Product