(p. $$pageTag$$) Refer to the above graph. Consider a situation where price increases from P3 to P4. In this price range, demand is relatively
A) inelastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area A).
B) elastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area A).
C) elastic because the loss in total revenue (area A) is greater than the gain in total revenue (areas E + F + G).
D) inelastic because the loss in total revenue (area A) is greater than the gain in total revenue (areas E + F +

Question

(p. $$pageTag$$)  Refer to the above graph. Consider a situation where price increases from P3 to P4. In this price range, demand is relatively
A) inelastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area A).
B) elastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area A).
C) elastic because the loss in total revenue (area A) is greater than the gain in total revenue (areas E + F + G).
D) inelastic because the loss in total revenue (area A) is greater than the gain in total revenue (areas E + F +

Quizplus · Accepted Answer

When price increases from P3 to P4, demand is relatively elastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area A). This means that the increase in revenue from selling at a higher price is more than offset by the decrease in revenue from selling fewer units due to the higher price.

(P pageTagpageTagpageTag ) Refer to the Above Graph

(P $pageTag$ ) Refer to the Above Graph