-The above figure shows the demand curve for crude oil.Suppose the price is currently $7.A supply shock suddenly raises the price to $9.What happens with the crude oil sales revenue?
A) Crude oil sales revenue stays the same.
B) Crude oil sales revenue declines by more than $300.
C) Crude oil sales revenue increases by more than $250.
D) Crude oil sales revenue increases by less than $250.

Question

-The above figure shows the demand curve for crude oil.Suppose the price is currently $7.A supply shock suddenly raises the price to $9.What happens with the crude oil sales revenue?
A) Crude oil sales revenue stays the same. 
B) Crude oil sales revenue declines by more than $300. 
C) Crude oil sales revenue increases by more than $250. 
D) Crude oil sales revenue increases by less than $250.

Quizplus · Accepted Answer

The increase in price from $7 to $9, despite potentially reducing the quantity sold due to the law of demand, can still increase total revenue if the price increase is significant enough to offset the reduction in quantity sold. This is because total revenue is calculated as price times quantity, and a higher price can lead to higher revenue even if fewer units are sold, assuming the demand is not perfectly elastic.

-The Above Figure Shows the Demand Curve for Crude Oil