Suppose the price of a good is $6 and quantity demanded is 10 units. When price decreases to $5, quantity demanded increases to 13 units. What happened to total revenue and what does this indicate?
A) Total revenue decreased from $65 to $60, indicating that demand is inelastic.
B) Total revenue decreased from $65 to $60, indicating that demand is elastic.
C) Total revenue increased from $60 to $65, indicating that demand is inelastic.
D) Total revenue increased from $60 to $65, indicating that demand is elastic.

Question

Quizplus · Accepted Answer

Total revenue initially is $6*10 = $60. After the price decrease, total revenue is $5*13 = $65. The increase in total revenue with a decrease in price indicates demand is elastic.

Suppose the Price of a Good Is $6 and Quantity