-Refer to the graphs above to answer this question.Suppose that the price of nuts decreases from P₁ to P₂ and the demand curve for chocolates shifts to the right from D₁ to D₂.What is the effect to total revenue from the sale of both nuts and chocolates? A)Total revenue will not change since the cross-elasticity coefficient is not known. B)Total revenue from the sale of chocolates will rise but not the total revenue from nuts. C)Total revenue may rise or fall depending on the size of the price decrease of nuts. D)Total revenue from the sale of both nuts and chocolates will fall. E)Total revenue from the sale of both nuts and chocolates will rise.

Question

Quizplus · Accepted Answer

The decrease in the price of nuts likely increases their consumption, potentially increasing total revenue from nuts if the demand is elastic. The rightward shift in the demand curve for chocolates indicates an increase in demand, likely increasing total revenue from chocolates. Together, these effects suggest an overall increase in total revenue from the sale of both nuts and chocolates.

-Refer to the Graphs Above to Answer This Question