Suppose That the Price of a Good Is $10 and Quantity

question 3

Multiple Choice

Suppose that the price of a good is $10 and quantity demanded is 50 units. When price decreases to $8, quantity demanded increases to 60 units. What happened to total revenue and what does this indicate?

• A) Total revenue decreased from $500 to $480, indicating that demand is inelastic.
• B) Total revenue decreased from $500 to $480, indicating that demand is elastic.
• C) Total revenue increased from $480 to $500, indicating that demand is inelastic.
• D) Total revenue increased from $480 to $500, indicating that demand is elastic.

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Definitions:

Residual Value

The estimated value of an asset at the end of its useful life.

Lease Terms

The conditions under which a lease will be granted, including duration, payment intervals, fees, restrictions, and penalties.

Lease Obligations

Financial commitments a company incurs as a result of entering into a lease agreement for property, plant, or equipment.

Lessee

A person or entity that leases an asset from another party, known as the lessor.