Use the figure below to answer the following question. Figure 4.1.3
-Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and the quantity of the good sold,then
A)this is an inferior good.
B)this is a normal good.
C)the price elasticity of demand is zero.
D)demand for this good is perfectly elastic.
E)the price elasticity of demand is 1.

Question

Use the figure below to answer the following question.  Figure 4.1.3
-Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and the quantity of the good sold,then
A)this is an inferior good. 
B)this is a normal good. 
C)the price elasticity of demand is zero. 
D)demand for this good is perfectly elastic. 
E)the price elasticity of demand is 1.

Quizplus · Accepted Answer

The relationship between total revenue and quantity sold, where total revenue remains constant as quantity changes, indicates that the price elasticity of demand is 1 (unitary elasticity). This means that the percentage change in quantity demanded is exactly equal to the percentage change in price.

Use the Figure Below to Answer the Following Question