Use the figure below to answer the following questions. Figure 4.1.2
-Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2,
A)total revenue increases.
B)total revenue decreases.
C)total revenue remains unchanged.
D)the quantity demanded increases by more than 10 percent.
E)the percentage change in quantity demanded is more than the percentage change in price.

Question

Use the figure below to answer the following questions.  Figure 4.1.2
-Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2,
A)total revenue increases. 
B)total revenue decreases. 
C)total revenue remains unchanged. 
D)the quantity demanded increases by more than 10 percent. 
E)the percentage change in quantity demanded is more than the percentage change in price.

Quizplus · Accepted Answer

According to the law of demand, as the price of a good decreases, the quantity demanded increases. However, a linear demand curve indicates that the increase in quantity demanded is not enough to offset the decrease in price, resulting in a decrease in total revenue. Therefore, as the price falls from $4 to $2, total revenue decreases.

Use the Figure Below to Answer the Following Questions