If the price elasticity of demand is elastic, then:
A) Ed

Question

If the price elasticity of demand is elastic, then:
A) Ed < 1.
B) consumers are relatively not very responsive to a price increase.
C) an increase in the price will increase total revenue.
D) there are likely a large number of substitute products available.

Quizplus · Accepted Answer

If the price elasticity of demand is elastic, it means that a small change in price leads to a relatively larger change in the quantity demanded. This indicates that consumers are responsive to price changes and there are likely a large number of substitute products available. When the price of a product increases in a competitive market with many substitute products available, consumers tend to switch to substitutes, leading to a decrease in the quantity demanded of the original product. As a result, the total revenue of the firm will decrease.

If the Price Elasticity of Demand Is Elastic, Then