- Refer to the Graph Above and Assume That the Areas

Multiple Choice

- Refer to the graph above and assume that the areas of the boxes are the same. Consider a situation where price increases from P₃ to P₄. In this price range, demand is relatively:

A) inelastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area A) .
B) elastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area A) .
C) elastic because the loss in total revenue (area A) is greater than the gain in total revenue (areas E + F + G) .
D) inelastic because the loss in total revenue (area A) is greater than the gain in total revenue (areas E + F + G) .