Suppose that the price of a good is $10 and quantity demanded is 50 units. When price decreases to $8, quantity demanded increases to 60 units. What happened to total revenue and what does this indicate?
A) Total revenue decreased from $500 to $480, indicating that demand is inelastic.
B) Total revenue decreased from $500 to $480, indicating that demand is elastic.
C) Total revenue increased from $480 to $500, indicating that demand is inelastic.
D) Total revenue increased from $480 to $500, indicating that demand is elastic.

Question

Quizplus · Accepted Answer

Total revenue initially is $500 (50 units * $10) and decreases to $480 (60 units * $8) when the price drops, indicating demand is inelastic because a price decrease led to a decrease in total revenue.

Suppose That the Price of a Good Is $10 and Quantity