Question

Suppose the total-revenue curve is derived from a particular linear demand curve. That demand curve must be: __________

a. inelastic for price increases that reduce quantity demanded from 4 units to 3 units.
b. unit elastic for price increases that reduce quantity demanded from 5 units to 4 units.
c. inelastic for price declines that increase quantity demanded from 2 units to 3 units.
d. elastic for price declines that increase quantity demanded from 5 units to 6 units.

Answer 1

The answer is C. inelastic for price declines that increase quantity demanded from 2 units to 3 units.

This question is about the demand curve.

Demand Curve

Demand curve represents a relationship between price of a product and its quantity demanded for a given period of time.

If total revenue curve is derived from particular linear demand curve then the demand curve must be inelastic for price declines.

The correct answer is c. inelastic for price declines that increase quantity demanded from 2 units to 3 units.

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