Final answer:
The demand for chocolate-covered peanuts is elastic, and total revenue will increase when the price decreases from $1.10 to $0.95 because the quantity demanded rises from 190 bags to 215 bags, resulting in greater total revenue.
Explanation:
When the price of chocolate-covered peanuts decreases from $1.10 to $0.95, the quantity demanded increases from 190 bags to 215 bags. This economic behavior is an example of the law of demand, which states that, all else being equal, as the price of a good falls, the quantity demanded of that good increases, and conversely, as the price of a good rises, the quantity demanded of that good decreases. In this price range, the demand for chocolate-covered peanuts is elastic, and total revenue will increase when price decreases because the decrease in price leads to a proportionally larger increase in the quantity demanded.
For example, originally at $1.10 per bag, the total revenue would have been 190 bags x $1.10 = $209.
At the new price of $0.95 per bag, the total revenue becomes 215 bags x $0.95 = $204.25.
Here, although the price has decreased, we see an increase in the quantity demanded, resulting in an increase in the total revenue, indicating an elastic demand scenario.