Multiple Choice
What is the elasticity of demand when the price of the good changes from \$3 to \$5?
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4. Elasticity
Total Revenue Along a Linear Demand Curve
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Refer to Figure 5-1. With reference to Graph A, at a price of \$5, total revenue equals:
A
10
B
5
C
50
D
25
Verified step by step guidance1
Identify the relevant graph (Graph A) and the price level given, which is \$5.
Determine the quantity demanded or supplied at the price of \$5 by looking at the graph's corresponding quantity on the horizontal axis.
Recall the formula for total revenue: \(\text{Total Revenue} = \text{Price} \times \text{Quantity}\).
Multiply the price (\$5) by the quantity obtained from the graph at that price to calculate total revenue.
Interpret the result to understand what total revenue represents in this context: the total amount of money received from selling the quantity at the given price.
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