Demand Curve Indicates Inelastic Demand

Steps:

• Identify the demand curve's steep slope, signaling low price elasticity.
• Recall that inelastic demand means quantity demanded changes little with price.
• Calculate total revenue (TR = P × Q); for inelastic curves, price rises increase TR.
• Conclude the curve shows revenue gains from price hikes.

Why A is correct:

• Inelastic demand (elasticity < 1) ensures price increases raise total revenue, as the percentage drop in quantity is smaller than the percentage price rise.

Why the others are wrong:

• B: Producers can always attempt price rises; the curve doesn't restrict this.
• C: Many substitutes imply elastic demand (flat curve), not shown here.
• D: The diagram may show a quantity of 20, but this doesn't conclude the number of buyers.

Final answer: A