Figure 5-6

-Refer to Figure 5-6.If price decreases from $15 to $10,what will happen to total revenue,and what does this tell us about demand
A)It will decrease by $5, so demand must be inelastic.
B)It will decrease by $20, so demand must be inelastic.
C)It will increase by $10, so demand must be elastic.
D)It will increase by $20, so demand must be elastic.

Question

Figure 5-6
 
-Refer to Figure 5-6.If price decreases from $15 to $10,what will happen to total revenue,and what does this tell us about demand
A)It will decrease by $5, so demand must be inelastic. 
B)It will decrease by $20, so demand must be inelastic. 
C)It will increase by $10, so demand must be elastic. 
D)It will increase by $20, so demand must be elastic.

Quizplus · Accepted Answer

According to the graph, at a price of $15, the total revenue is $75 ($15 x 5 units sold). If the price decreases to $10, then the quantity demanded increases to 7 units, but the total revenue decreases to $55 ($10 x 7 units sold). This indicates that demand is inelastic because the decrease in price did not result in a proportional increase in quantity demanded to maintain the same total revenue. Therefore, the best choice is B.

Figure 5-6 -Refer to Figure 5-6.If Price Decreases from $15 to $10,what