-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $4.00 to $3.50, then total revenue would ________ because demand is ________.
A) decrease; elastic
B) increase; elastic
C) decrease; inelastic
D) increase; inelastic

Question

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $4.00 to $3.50, then total revenue would ________ because demand is ________.
A) decrease; elastic 
B) increase; elastic 
C) decrease; inelastic 
D) increase; inelastic

Quizplus · Accepted Answer

When demand is elastic, a decrease in price leads to an increase in total revenue because the percentage increase in quantity demanded is greater than the percentage decrease in price.

-The Above Figure Shows the Demand Curve for Movie Rentals