Exhibit 5-5 Demand curve for computers

In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:
A) elastic.
B) inelastic.
C) unitary elastic.
D) nonelastic.

Question

Exhibit 5-5 Demand curve for computers
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In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:
A) elastic. 
B) inelastic. 
C) unitary elastic. 
D) nonelastic.

Quizplus · Accepted Answer

The change in total revenue resulting from a change in price from A to D indicates that the demand curve is elastic. This is because the change in price leads to a more than proportional change in quantity demanded, resulting in a decrease in total revenue. In other words, consumers are sensitive to changes in price and will reduce their demand significantly in response to a price increase, leading to a greater decrease in revenue than the increase in price.

Exhibit 5-5 Demand Curve for Computers