-In the above figure, along which range would total revenue remain unchanged by raising prices?
A) Between point a and point b
B) Between point c and point d
C) Between point d and point e
D) Below point e and above point a.

Question

-In the above figure, along which range would total revenue remain unchanged by raising prices?
A) Between point a and point b 
B) Between point c and point d 
C) Between point d and point e 
D) Below point e and above point a.

Quizplus · Accepted Answer

Total revenue is equal to price times quantity. If price increases, quantity demanded will decrease. To keep total revenue unchanged, the decrease in quantity demanded must be exactly offset by the increase in price. This will occur only if the price elasticity of demand is equal to -1. The graph shows that the price elasticity of demand is -1 between points a and b.

-In the Above Figure, Along Which Range Would Total Revenue