When Joe's Gas raises its price for regular unleaded gasoline, total revenue from regular unleaded gas falls to zero. It must be the case that
A)the demand for Joe's regular unleaded gasoline is perfectly elastic.
B)the demand for Joe's regular unleaded is inelastic.
C)there are not many good substitutes for Joe's regular unleaded gasoline.
D)consumers are switching to premium grades of gasoline.

Question

Quizplus · Accepted Answer

If an increase in price leads total revenue to fall to zero, then this suggests that demand for the product was perfectly elastic at the original price (i.e., the demand curve was horizontal at that price).

When Joe's Gas Raises Its Price for Regular Unleaded Gasoline