Figure 5-8
-Refer to Figure 5-8.When price falls from $25 to $20,demand is
A)inelastic,since total revenue decreases from $4,000 to $2,500.
B)inelastic,since total revenue increases from $2,500 to $4,000.
C)elastic,since total revenue increases from $2,500 to $4,000.
D)unit elastic,since total revenue does not change.

Question

Figure 5-8 
-Refer to Figure 5-8.When price falls from $25 to $20,demand is
A)inelastic,since total revenue decreases from $4,000 to $2,500. 
B)inelastic,since total revenue increases from $2,500 to $4,000. 
C)elastic,since total revenue increases from $2,500 to $4,000. 
D)unit elastic,since total revenue does not change.

Quizplus · Accepted Answer

When the price falls from $25 to $20 and total revenue increases from $2,500 to $4,000, it indicates that 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 5-8 -Refer to Figure 5-8.When Price Falls from $25 to $20,demand