Over the price range from $180 to $120 in Figure 20.1, ceteris paribus,
A) Demand is elastic.
B) Total revenue is maximized.
C) Demand is increasing.
D) Utility is maximized.

Question

Over the price range from $180 to $120 in Figure 20.1, ceteris paribus,
A) Demand is elastic. 
B) Total revenue is maximized. 
C) Demand is increasing. 
D) Utility is maximized.

Quizplus · Accepted Answer

According to the Law of Demand, as price increases, quantity demanded decreases, ceteris paribus. In this case, the price range results in a decrease in quantity demanded, indicating that consumers are sensitive to changes in price. This means that demand is elastic.

Over the Price Range from $180 to $120 in Figure