Over the price range from $180 to $120 in Figure 20.1, ceteris paribus,
A) Demand is elastic.
B) Total revenue is maximized.
C) Demand is increasing.
D) Utility is maximized.

Question

Over the price range from $180 to $120 in Figure 20.1, ceteris paribus,
A) Demand is elastic. 
B) Total revenue is maximized. 
C) Demand is increasing. 
D) Utility is maximized.

Quizplus · Accepted Answer

When the price range decreases from $180 to $120, ceteris paribus, demand becomes more elastic, meaning that the percentage change in quantity demanded is greater than the percentage change in price. As a result, a decrease in price will lead to an increase in total revenue. Therefore, option A is the correct choice. Options B, C, and D are not necessarily true, and there is not enough information in the question to support them.

Over the Price Range from $180 to $120 in Figure