(Figure: Price Decrease and Elasticity) Refer to the Figure

question 92

Multiple Choice

(Figure: Price Decrease and Elasticity) Refer to the figure. If price decreases from $20 to $10, total revenue will: Figure: Price Decrease and Elasticity

• A) decrease by $1,500, so the demand curve is inelastic.
• B) decrease by $2,500, so the demand curve is inelastic.
• C) increase by $1,500, so the demand curve is elastic.
• D) increase by $2,500, so the demand curve is elastic.

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Definitions:

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good or service versus what they actually receive, reflecting gains from trade.

Consumer Surplus

The gap between the aggregate sum consumers are ready and can afford to pay for a good or service and the aggregate sum they actually spend.

Uses of Markets

The functions markets serve in allowing buyers and sellers to exchange goods, services, and information, facilitating the allocation of resources.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price.