Figure 5-5

-Refer to Figure 5-5.When price falls from $40 to $30,what do we know about demand
A)It must be elastic since total revenue increases from $8000 to $9000.
B)It must be inelastic since total revenue increases from $8000 to $9000.
C)It must be inelastic since total revenue decreases from $9000 to $8000.
D)It must be elastic since total revenue decreases from $9000 to $8000.

Question

Figure 5-5
 
-Refer to Figure 5-5.When price falls from $40 to $30,what do we know about demand
A)It must be elastic since total revenue increases from $8000 to $9000. 
B)It must be inelastic since total revenue increases from $8000 to $9000. 
C)It must be inelastic since total revenue decreases from $9000 to $8000. 
D)It must be elastic since total revenue decreases from $9000 to $8000.

Quizplus · Accepted Answer

When the price falls and total revenue increases, demand is elastic. This is because the percentage increase in quantity demanded is greater than the percentage decrease in price, leading to an increase in total revenue.

Figure 5-5 -Refer to Figure 5-5.When Price Falls from $40 to $30,what