Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Refer to the diagram above. What will happen at the market if supply decreases?
demand decreases and total revenue goes down
both price and total revenue go up
both price and total revenue go down
O price goes down and total revenue goes up
Expert Solution

Step 1
In the graph, it is clear that the demand curve is inelastic. So the supply and total revenue will show an inverse relationship.
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