### Graph Analysis and Questions#### Graph Description:The graph is a typical demand curve plotted on a price-quantity axis. The vertical axis represents price, while the horizontal axis represents quantity. The demand curve slopes downward, indicating a negative relationship between price and quantity demanded.- **Price Levels:** - $ P1 $ is a lower price point on the vertical axis. - $ P2 $ is a higher price point on the vertical axis.- **Quantity Levels:** - $ Q1 $ is the quantity associated with $ P1 $. - $ Q2 $ is the quantity associated with $ P2 $.- **Rectangles:** - Rectangle $ A $ is formed at the top left of the graph above the demand curve, between prices $ P2 $ and $ P1 $, and up to quantity $ Q2 $. - Rectangle $ B $ is directly below rectangle $ A $, between price $ P1 $ and the horizontal axis, up to quantity $ Q2 $. - Rectangle $ C $ is to the right of rectangle $ A $, between prices $ P2 $ and $ P1 $, and up to quantity $ Q1 $. - Rectangle $ D $ is directly below rectangle $ C $, between price $ P1 $ and the horizontal axis, up to quantity $ Q1 $.#### Questions and Options:**8. If rectangle D is larger than rectangle A, then**- a) Demand is elastic between prices $ P1 $ and $ P2 $.- b) A decrease in price from $ P2 $ to $ P1 $ will cause an increase in total revenue.- c) The magnitude of the percent change in price between $ P1 $ and $ P2 $ is smaller than the magnitude of the corresponding percent change in quantity demanded.- d) All of the above are correct.**9. Total revenue when the price is $ P1 $ is represented by the area(s)**- a) $ B + D $.- b) $ A + B $.- c) $ C + D $.- d) $ D $.**10. Total revenue when the price is $ P2 $ is represented by the area(s)**- a) $ B + D $.- b) $ A + B $.

The demand is elastic as the percentage change in quantity id=s greater than the percentage change…

Price P2 A P1 B Demand Q2 Q1 Quantity 8. If rectangle D is larger than rectangle A, then a) demand is elastic between prices P1 and P2. b) a decrease in price from P2 to P1 will cause an increase in total revenue. c) the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of corresponding percent change in quantity demanded. d) All of the above are correct. 9. Total revenue when the price is P1 is represented by the area(s) a) B + D. b) A + B. c) C+ D. d) D. 10. Total revenue when the price is P2 is represented by the area(s) a) В + D. b) A + B. c) C + D. d) D.

Price P2 A P1 B Demand Q2 Q1 Quantity 8. If rectangle D is larger than rectangle A, then a) demand is elastic between prices P1 and P2. b) a decrease in price from P2 to P1 will cause an increase in total revenue. c) the magnitude of the percent change in price between P1 and P2 is smaller than the magnitude of corresponding percent change in quantity demanded. d) All of the above are correct. 9. Total revenue when the price is P1 is represented by the area(s) a) B + D. b) A + B. c) C+ D. d) D. 10. Total revenue when the price is P2 is represented by the area(s) a) В + D. b) A + B. c) C + D. d) D.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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