Figure 5-11 -Refer to Figure 5-11.Suppose This Demand Curve Is a Straight,downward-Sloping

question 303

Multiple Choice

Figure 5-11
-Refer to Figure 5-11.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 > P₁.In which of the following cases could we possibly find that (i) demand is elastic and (ii) a decrease in price from P₁ to P₂ causes an decrease in total revenue?

• A)0 < P₁ < P₂ < $10.
• B)$10 < P₁ < P₂ < $20.
• C)P₁ > $20.
• D)None of the above is correct.

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