Use the following to answer question(s): Demand, Elasticity, and Total Revenue

-(Exhibit: Demand, Elasticity, and Total Revenue) As price is reduced from point F to P in Panel (a), total revenue will:
A) decrease.
B) increase.
C) stay the same.
D) at first increase and then decrease.

Question

Use the following to answer question(s): Demand, Elasticity, and Total Revenue
 
-(Exhibit: Demand, Elasticity, and Total Revenue) As price is reduced from point F to P in Panel (a), total revenue will:
A) decrease. 
B) increase. 
C) stay the same. 
D) at first increase and then decrease.

Quizplus · Accepted Answer

When price is reduced from point F to P, the demand is elastic, meaning that the percentage increase in quantity demanded is greater than the percentage decrease in price, leading to an increase in total revenue.

Use the Following to Answer Question(s): Demand, Elasticity, and Total