On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:
A) is impossible.
B) will increase total revenue.
C) will decrease total revenue.
D) raises the price elasticity of demand.
E) decreases quantity demanded.

Question

Quizplus · Accepted Answer

When the price elasticity of demand is less than 1, it means that the percentage change in quantity demanded is less than the percentage change in price. In other words, a decrease in price will lead to a proportionally smaller increase in quantity demanded. Therefore, the decrease in revenue due to the lower price will not be offset by the increase in revenue due to the higher quantity demanded, resulting in a decrease in total revenue.

On a Part of the Demand Curve Where the Price