Figure: Elasticity and Revenue Refer to the figure. When the price of the product rises from $4 to $6, the total revenue changes by the area(s) represented by:
A) F.
B) F - E.
C) F - (E +
B).
D) F + D + A.

Question

Figure: Elasticity and Revenue  Refer to the figure. When the price of the product rises from $4 to $6, the total revenue changes by the area(s) represented by:
A) F. 
B) F - E. 
C) F - (E +
B). 
D) F + D + A.

Quizplus · Accepted Answer

The total revenue is represented by the rectangle formed by price and quantity. The area of the rectangle at the original price of $4 is represented by AEFD. When the price increases to $6, the quantity demanded decreases, and the new total revenue is represented by the rectangle formed by BGHC. The change in revenue is the difference between the areas of the two rectangles, which is represented by F - (E + B). Therefore, the correct answer is C.

Figure: Elasticity and Revenue Refer to the Figure