Final answer:
The bar graph can be improved by using a Pareto chart for clarity. The choice between graph types—pie, bar, line—depends on the data's purpose. Understanding price elasticity of demand is key to setting optimal pricing for maximizing revenue.
Step-by-step explanation:
When reviewing the effectiveness of a chart like the bar graph in Figure 1.9 for showing the revenue of different product lines, it's important to consider readability and the ease of interpretation. If this chart is not sorted in a way that highlights the most important data—such as having bars arranged from largest to smallest—it might be difficult to understand at a glance.
A Pareto chart is an alternative that arranges the bars from largest to smallest, making it clear which product lines are generating the most revenue. This could be a solution to making the data more accessible and immediately understandable.
Choosing between pie graphs, bar graphs, and line graphs depends on the data being represented. Pie graphs can effectively show the division of a whole into parts, but with too many slices, they become hard to read. Bar graphs are versatile and can show comparisons between different groups, while line graphs are best for showing trends over time.
The question of which graph to use depends on whether you want to compare parts of a whole (pie graphs), compare different categories (bar graphs), or show changes over time (line graphs).
Regarding the concept of optimum pricing and price elasticity of demand, understanding whether the demand is elastic, inelastic, or unitary is crucial for deciding whether to raise or lower ticket prices to maximize revenue. Elastic demand suggests lowering prices could increase total revenue, while inelastic demand suggests increasing prices could be beneficial.
The complete question is: the following chart is trying to describe the revenue of different product lines. is this chart good to read? if not, what is the problem with it and how to solve it ? is: