Exhibit 5-8
-Which of the following statements is true in the range of the total revenue curve labeled A in Exhibit 5-8?
A) Demand is elastic.
B) Demand is inelastic.
C) Demand is unit elastic.
D) We cannot tell anything about elasticity of demand because this is a total revenue curve.
E) Demand is perfectly elastic.

Question

Exhibit 5-8 
-Which of the following statements is true in the range of the total revenue curve labeled A in Exhibit 5-8?
A) Demand is elastic. 
B) Demand is inelastic. 
C) Demand is unit elastic. 
D) We cannot tell anything about elasticity of demand because this is a total revenue curve. 
E) Demand is perfectly elastic.

Quizplus · Accepted Answer

In the range where total revenue is increasing, demand is elastic. This is because a price decrease leads to a proportionally larger increase in quantity demanded, thus increasing total revenue.

Exhibit 5-8 -Which of the Following Statements Is True in the Range