Figure 5-6

-Refer to Figure 5-6.Sellers' total revenue would increase if the price
A) increased from $4 to $6.
B) increased from $16 to $18.
C) decreased from $8 to $6.
D) All of the above are correct.

Question

Figure 5-6
 
-Refer to Figure 5-6.Sellers' total revenue would increase if the price
A) increased from $4 to $6. 
B) increased from $16 to $18. 
C) decreased from $8 to $6. 
D) All of the above are correct.

Quizplus · Accepted Answer

In Figure 5-6, we can see that the total revenue for the sellers is the highest at a price of $6 (where P=Q, i.e. the midpoint of the demand curve). Therefore, if the price were to increase from $4 to $6, the sellers' total revenue would increase. Option B is incorrect because an increase in price from $16 to $18 will result in a decrease in total revenue due to the law of demand. Option C is also incorrect because a decrease in price from $8 to $6 will result in an increase in quantity demanded, but it may or may not offset the decrease in price and result in an increase in total revenue for the seller.

Figure 5-6 -Refer to Figure 5-6.Sellers' Total Revenue Would Increase If the Would