If a firm generates $10,000 in revenue at $6 and $8,000 at $5, what can be inferred about the demand?

To analyze the demand in this scenario, it is essential to consider how price changes affect total revenue. When the price increased from $5 to $6, the total revenue decreased from $8,000 to $10,000. This indicates that the firm is earning less revenue when the price is lower compared to when it is higher.

In the context of elasticity, if a price increase leads to an increase in total revenue, it implies that demand is inelastic. This means that consumers are less sensitive to price changes within this range; they will continue to purchase relatively similar quantities even as prices rise. The increase in revenue as price rises suggests that the quantity demanded decreases less proportionally compared to the price increase.

Therefore, the inference drawn from these observations is that demand is indeed inelastic in the price range of $5 to $6, as the relationship between price and total revenue indicates that consumers are willing to pay more without drastically reducing their quantity demanded.