Figure 5-7Refer to Figure 5-7. If, holding the supply curve fixed, there were an increase in demand that caused the equilibrium price to increase from $6 to $7, then sellers' total revenue would

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BlackTom AI · Accepted Answer

To analyze this scenario, imagine the supply curve is fixed (vertical relative to the demand shift). When demand increases, the equilibrium price rises from $6 to $7, and along the fixed supply curve the quantity supplied also rises from its original quantity to a higher quantity at price $7.

Since total revenue is price × quantity, both components are increasing: price goes up from $6 to $7, and quantity supplied increases to a higher level corresponding to the higher price along the same supply curve. With both factors rising, their product—and thus total revenue—will increase.

If we consider potential misinterpretations, some might think only price matters for revenue, but with a upward-sloping supply, higher price typically comes with higher quantity supplied, reinforcing the revenue increase.

In this setup, there isn’t a scenario where revenue would stay the same or fall purely due to the price rise, because the quantity factor moves in the same direction (upward along the supply curve) when price increases from $6 to $7.

Therefore, the seller’s total revenue increases as a result of the shift in demand that raises the equilibrium price from $6 to $7 while holding the supply curve fixed.

Figure 5-7Refer to Figure 5-7. If, holding the supply curve fixed, there were an increase in demand that caused the equilibrium price to increase from $6 to $7, then sellers' total revenue would

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