Figure 5-9 -Refer to Figure 5-9. Suppose This Demand Curve Is a Curve

question 263

Multiple Choice

Figure 5-9
-Refer to Figure 5-9. Suppose this demand curve is a straight, downward-sloping line all the way from the horizontal intercept to the vertical intercept. We choose two prices, P₁ and P₂, and the corresponding quantities demanded, Q₁ and Q₂, for the purpose of calculating the price elasticity of demand. Also suppose P₂ > P_1. In which of the following cases could we possibly find that (i) demand is elastic and (ii) an increase in price from P₁ to P₂ causes an increase in total revenue?

• A)0 < P₁ < P₂ < $10.
• B)$10 < P₁ < P₂ < $15.
• C)P₁ > $15.
• D)None of the above is correct.

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