Total Revenue

1. A good has a unitary price elasticity of demand and at a price of $20 a firm sells 40 000 units.
How many will the firm sell if it charges a price of $5?
A. 10 000
B. 100 000
C. 160 000
D. 200 000

2. The diagram shows the relationship between total expenditure and price for three products,
1, 2 and 3.

Which curves represent the products with price elastic and unitary price elasticity of demand?
Elastic Unitary
A 1 2
B 2 3
C 3 1
D 3 2

3. The diagram shows the demand curve for a product.

Economics Chapter 2
 If the rectangle OLMN is equal in area to the rectangle OPQR, which statement is correct?
A. A rise in price from OR to ON results in the same proportionate fall in quantity demanded.
B. Consumer surplus falls by RSMN if the price rises from OR to ON.
C. The price elasticity of demand is unitary for all changes in price.
D. Total revenue falls by MSQ if the price rises from OR to ON.

Economics Chapter 2