Refer to Figure 5-5. If the price decreased from $36 to $12, total revenue would

A) increase by $4,800, and demand is elastic between points X and Z.
B) increase by $7,200, and demand is elastic between points X and Z.
C) decrease by $4,800, and demand is inelastic between points X and Z.
D) decrease by $7,200, and demand is inelastic between points X and Z.

Question

Marco Olvera · Accepted Answer

Final Answer : A, Explanation :  The price decrease from $36 to $12, so the change in price is $36 - $12 = $24. The quantity demanded increases from 200 to 400, so the change in quantity demanded is 400 - 200 = 200. The total revenue is price times quantity, so the change in total revenue is $24 * 200 = $4,800. Since the total revenue increases, demand is elastic between points X and Z.

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