Multiple Choice
If there is an increase in market demand in a perfectly competitive market, then in the short run:
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3. The Market Forces of Supply and Demand
Market Equilibrium
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Refer to Figure 5-1. With reference to Graph B, at a price of \$5, total revenue equals:
A
\$10
B
\$5
C
\$20
D
\$25
Verified step by step guidance1
Identify the quantity demanded at the price of \$5 from Graph B. This means looking at the demand curve and finding the quantity corresponding to the price level of \$5.
Recall the formula for total revenue (TR), which is the product of price (P) and quantity demanded (Q): \(TR = P \times Q\).
Substitute the price \$5 and the quantity you found from the graph into the total revenue formula.
Multiply the price by the quantity to calculate the total revenue at the price of \$5.
Compare your calculated total revenue with the given options to confirm the correct answer.
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