Figure 5-2

-Refer to Figure 5-2.If the price decreased from $18 to $6,
A)total revenue would increase by $1,200 and demand is elastic between points A and C.
B)total revenue would increase by $800 and demand is elastic between points A and C.
C)total revenue would decrease by $1,200 and demand is inelastic between points A and C.
D)total revenue would decrease by $800 and demand is inelastic between points A and C.

Question

Figure 5-2
 
-Refer to Figure 5-2.If the price decreased from $18 to $6,
A)total revenue would increase by $1,200 and demand is elastic between points A and C. 
B)total revenue would increase by $800 and demand is elastic between points A and C. 
C)total revenue would decrease by $1,200 and demand is inelastic between points A and C. 
D)total revenue would decrease by $800 and demand is inelastic between points A and C.

Quizplus · Accepted Answer

Total revenue is calculated by multiplying the price by the quantity demanded. If the price decreases from $18 to $6, the quantity demanded will increase from 100 units to 200 units. Therefore, total revenue will increase by $1,200 (200 units x $6 - 100 units x $18). Demand is elastic between points A and C because the percentage change in quantity demanded is greater than the percentage change in price.

Figure 5-2 -Refer to Figure 5-2.If the Price Decreased from $18 to Decreased