Figure 5-5

-Refer to Figure 5-5. If the price decreased from $36 to $12, total revenue would
A)increase by $4,800, and demand is elastic between points X and Z.
B)increase by $7,200, and demand is elastic between points X and Z.
C)decrease by $4,800, and demand is inelastic between points X and Z.
D)decrease by $7,200, and demand is inelastic between points X and Z.

Question

Figure 5-5
 
-Refer to Figure 5-5. If the price decreased from $36 to $12, total revenue would
A)increase by $4,800, and demand is elastic between points X and Z. 
B)increase by $7,200, and demand is elastic between points X and Z. 
C)decrease by $4,800, and demand is inelastic between points X and Z. 
D)decrease by $7,200, and demand is inelastic between points X and Z.

Quizplus · Accepted Answer

The price decrease from $36 to $12, so the change in price is $36 - $12 = $24. The quantity demanded increases from 200 to 400, so the change in quantity demanded is 400 - 200 = 200. The total revenue is price times quantity, so the change in total revenue is $24 * 200 = $4,800. Since the total revenue increases, demand is elastic between points X and Z.

Figure 5-5 -Refer to Figure 5-5. If the Price Decreased from $36