- 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 decreases from P₂ to P₁. In this price range, demand is relatively:

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