Suppose that a new drug has been approved to treat a life-threatening disease.Demand for that drug is shown on the graph below.Prior to approval of this drug,the only treatment for this condition was non-prescription pain relief.Demand for one brand of non-prescription pain reliever is also shown on the graph below.
Refer to the figure above.The manufacturer of the new drug would _______ total revenue by increasing the price from $15 to $25.
A)increase
B)decrease,but continue to earn some
C)experience no change
D)completely eliminate

Question

Suppose that a new drug has been approved to treat a life-threatening disease.Demand for that drug is shown on the graph below.Prior to approval of this drug,the only treatment for this condition was non-prescription pain relief.Demand for one brand of non-prescription pain reliever is also shown on the graph below. 
Refer to the figure above.The manufacturer of the new drug would _______ total revenue by increasing the price from $15 to $25.
A)increase 
B)decrease,but continue to earn some 
C)experience no change 
D)completely eliminate

Quizplus · Accepted Answer

In the lower half of a linear demand curve demand is inelastic and a price increase will increase revenue.

Suppose That a New Drug Has Been Approved to Treat