Use the following diagram to answer the following questions.

-Refer to Diagram 4-3. Suppose supply increases from S₂ to S₁. We know that total revenue will:

Question

Use the following diagram to answer the following questions.
 
-Refer to Diagram 4-3. Suppose supply increases from S₂ to S₁. We know that total revenue will:

Quizplus · Accepted Answer

When supply increases from S₂ to S₁, the price will decrease from P₂ to P₁, and the quantity sold will increase from Q₂ to Q₁. Since the price decrease is smaller than the increase in quantity sold, total revenue will increase. Therefore, the correct answer is B, total revenue will increase.

Use the Following Diagram to Answer the Following Questions