If a firm's total revenue decreases when the price of its product is raised from $50 to $55, the demand for this product between these two prices is
A. unitary elastic
B. elastic
C. inelastic
D. static
E. Cannot tell from the information given
Answer: (B) In this question, it states that the firm's total revenues decline when price goes up by $5. That means the quantity demanded must have declined substantially in response to the price increase for total revenues to drop (Price 3 Quantity Demanded = Total Revenues). This is characteristic of elastic demand curves. Hence, the right answer is (B).