Exhibit 5-2

-Based on the information in Exhibit 5-2, the demand for the good is __________ and an increase in price from $40 to $60 per unit will __________ total revenue.
A) unit elastic; increase
B) elastic; decrease.
C) unit elastic; not change
D) inelastic; increase
E) elastic; decrease

Question

Exhibit 5-2
 
-Based on the information in Exhibit 5-2, the demand for the good is __________ and an increase in price from $40 to $60 per unit will __________ total revenue.
A) unit elastic; increase 
B) elastic; decrease. 
C) unit elastic; not change 
D) inelastic; increase 
E) elastic; decrease

Quizplus · Accepted Answer

If the demand is elastic, an increase in price will lead to a decrease in total revenue because the percentage drop in quantity demanded is greater than the percentage increase in price.

Exhibit 5-2 -Based on the Information in Exhibit 5-2, the Demand for 5-2