Figure 5-10

-Refer to Figure 5-10.When price falls from $50 to $40,demand is
A) inelastic, since total revenue decreases from $8,000 to $5,000.
B) inelastic, since total revenue increases from $5,000 to $8,000.
C) elastic, since total revenue increases from $5,000 to $8,000.
D) unit elastic, since total revenue does not change.

Question

Figure 5-10
 
-Refer to Figure 5-10.When price falls from $50 to $40,demand is
A) inelastic, since total revenue decreases from $8,000 to $5,000. 
B) inelastic, since total revenue increases from $5,000 to $8,000. 
C) elastic, since total revenue increases from $5,000 to $8,000. 
D) unit elastic, since total revenue does not change.

Quizplus · Accepted Answer

When the price falls from $50 to $40, the quantity demanded increases from 100 to 125, resulting in an increase in total revenue from $5,000 to $8,000. This suggests that demand is elastic, meaning that the change in price has a greater effect on the quantity demanded.

Figure 5-10 -Refer to Figure 5-10.When Price Falls from $50 to $40,demand