The elasticity in the vicinity of five different points along a demand curve varies as follows:
TABLE 5-3

-Refer to Table 5-3. At what points would a price increase be accompanied by an increase in total revenue?
A) A, C, and E
B) A and E
C) B and D
D) A and D

Question

The elasticity in the vicinity of five different points along a demand curve varies as follows:
TABLE 5-3
 
-Refer to Table 5-3. At what points would a price increase be accompanied by an increase in total revenue?
A) A, C, and E 
B) A and E 
C) B and D 
D) A and D

Quizplus · Accepted Answer

At points B and D, the demand is elastic, meaning that the quantity demanded changes more than proportionately to a change in price. Therefore, a price increase in these regions would lead to a decrease in total revenue. Conversely, at points A, C, and E, the demand is inelastic, meaning that the quantity demanded changes less than proportionately to a change in price, which is not the scenario described in the question.

The Elasticity in the Vicinity of Five Different Points Along