Regarding demand elasticity, which of the following statements is correct?
A)If demand for seller's product is elastic, a price increase will decrease total revenue.
B)If demand for seller's product is elastic, a price increase will increase total revenue.
C)If demand is exactly unit elastic, an increase in price will raise total revenue
D)If demand is exactly unit elastic, an increase in price will raise total revenue.

Question

Quizplus · Accepted Answer

If the demand for the seller's product is elastic, it means that a small increase in price will lead to a large decrease in quantity demanded. Therefore, increasing the price will lead to a decrease in total revenue because the decrease in quantity demanded will outweigh the increase in price.

Regarding Demand Elasticity, Which of the Following Statements Is Correct