Chapter 47, Problem 2FRQ

a)

To determine

A demand curve which is a straight line and is neither perfectly elastic nor perfectly inelastic on graph

Explanation of Solution

A labeled graph that represents a demand curve which is a straight line and is neither perfectly elastic nor perfectly inelastic:

  

Economics Concept Introduction

Introduction: Price elasticity of demand refers to the measure how the demand is sensitive to price or how the change in price affects the demand of the good.

b)

To determine

The effect of increase in price on total revenue

Explanation of Solution

If price increases, it will decrease total revenue because the negative affect of price increase is higher than the positive affect.

Economics Concept Introduction

Introduction: Total revenue is calculated by multiplying the quantity and price.