-The above figure illustrates the demand for peanuts. If the price falls from $12 to $9 a bag, total revenue will _______, and if the price rises from $3 to $6 a bag, total revenue will _______.
A) increase; decrease
B) decrease; decrease
C) increase; increase
D) decrease; increase

Question

-The above figure illustrates the demand for peanuts. If the price falls from $12 to $9 a bag, total revenue will _______, and if the price rises from $3 to $6 a bag, total revenue will _______.
A) increase; decrease 
B) decrease; decrease 
C) increase; increase 
D) decrease; increase

Quizplus · Accepted Answer

Total revenue is calculated as the price per unit times the quantity sold. When the price falls from $12 to $9, the increase in quantity demanded (due to the law of demand) likely outweighs the decrease in price per unit, leading to an increase in total revenue. Similarly, when the price rises from $3 to $6, the decrease in quantity demanded might be proportionally less significant than the increase in price, potentially leading to an increase in total revenue as well. This scenario assumes a certain elasticity of demand where the percentage change in quantity demanded is less than the percentage change in price.

-The Above Figure Illustrates the Demand for Peanuts