If demand is price elastic, a decrease in price causes:
A) an increase in total revenue.
B) a decrease in total revenue.
C) no change in total revenue.
D) an increase in quantity, but anything can happen to revenue.

Question

Quizplus · Accepted Answer

When demand is price elastic, a decrease in price will lead to a larger increase in quantity demanded. This means that the increase in revenue from selling more units will outweigh the decrease in revenue from selling each unit at a lower price, resulting in a total increase in revenue.

If Demand Is Price Elastic, a Decrease in Price Causes