Refer to the Graph Above and Assume That the Areas

question 42

Multiple Choice

Refer to the graph above and assume that the areas of the boxes are the same.Consider a situation where price decreases from P₂ to P₁.In this price range,demand is relatively:

• A) inelastic because the loss in total revenue (areas D + G + I +
• J)is greater than the gain in total revenue (areas C + F +
• H).
• B) elastic because the loss in total revenue (areas C + F +
• H)is greater than the gain in total revenue (area
• J).
• C) elastic because the loss in total revenue (area
• J)is less than the gain in total revenue (areas C + F +
• H).
• D) inelastic because the gain in total revenue (area
• J)is less than the loss in total revenue (areas C + F +

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