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47
47.Suppose that the above total revenue curve is derived from a particular linear demand curve. That demand curve must be:
A.elastic for price increases that reduce quantity demanded from 8 units to 7 units.
B.inelastic for price increases that reduce quantity demanded from 4 units to 3 units.
C.elastic for price declines that increase quantity demanded from 6 units to 7 units.
D.inelastic for price declines that increase quantity demanded from 6 units to 7 units.
Expert Solution
When price decreases, quantity demanded increases, but total revenue decreases. This is the inelastic portion of the demand curve. So, The correct option is D "Inelastic for price declines that increase quantity demanded from 6 to 7".
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