Exhibit 5-5
-In Exhibit 5-5, what is the total revenue to the left of point a?
A) less than $50, if demand is price inelastic
B) less than $50, if demand is price elastic
C) $50
D) more than $50, if demand is price elastic
E) not enough information to tell

Question

Exhibit 5-5 
-In Exhibit 5-5, what is the total revenue to the left of point a?
A) less than $50, if demand is price inelastic 
B) less than $50, if demand is price elastic 
C) $50 
D) more than $50, if demand is price elastic 
E) not enough information to tell

Quizplus · Accepted Answer

Point a represents the midpoint of the demand curve, where price and quantity are equal. Therefore, the total revenue to the left of point a is the area of the rectangle formed by the price and quantity at that point. Since the price at point a is $50, the total revenue to the left of it would be less than $50 if demand is price elastic (because quantity demanded would be relatively high), but more than $50 if demand is price inelastic (because quantity demanded would be relatively low). However, since we do not have information about the elasticity of demand, the only option that is always true is B (less than $50, if demand is price elastic).

Exhibit 5-5 -In Exhibit 5-5, What Is the Total Revenue to the Revenue