Figure 5-4 -Refer to Figure 5-4. If rectangle D is larger than rectangle A, then which of the following is not correct? A)Demand is elastic between prices P₁ and P₂. B)A decrease in price from P₂ to P₁ will cause an increase in total revenue. C)The magnitude of the percentage change in price between P₁ and P₂ is smaller than the magnitude of the corresponding percent change in quantity demanded. D)An increase in price from P₁ to P₂ will cause an increase in total revenue.

Question

Quizplus · Accepted Answer

When demand is elastic, an increase in price leads to a decrease in total revenue because the percentage decrease in quantity demanded is greater than the percentage increase in price. Thus, statement D, which suggests an increase in price would increase total revenue in this context, is not correct.

Figure 5-4 -Refer to Figure 5-4. If Rectangle D Is Larger Than