Use the Graphs Below to Answer the Following Questions

Question

Examlex · Accepted Answer

The Answer is a.The equilibrium price would be $60 and the equilibrium quantity would be 350.b.Total revenue for both graphs would be $21 000 ($60 × 350).c.On graph A, equilibrium price is now $72 and equilibrium quantity is 325.Total revenue for graph A would now be $23 400.On graph B, equilibrium price is now $65 and equilibrium quantity is now 300.Total revenue for graph B would now be $19 500.(See the graphs for this answer.)
d.The answer to C shows the expected outcome.Since the demand curve in graph A is inelastic, we would expect that when price increased, total revenue would increase (from $21 000 to $23 400).On graph B, since the demand is elastic, we would expect an increase in price to lower total revenue (from $21 000 to $19 500).

Use the Graphs Below to Answer the Following Questions

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