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)decreases quantity demanded.
D)raises the price elasticity of demand.
E)will reduce total revenue.

Question

Quizplus · Accepted Answer

When the price elasticity of demand is less than 1, a decrease in price will lead to a proportionately smaller increase in quantity demanded. As a result, the decrease in price will cause a decrease in total revenue since the gain in revenue from selling more units will not offset the loss from selling each unit at a lower price.

On a Part of the Demand Curve Where the Price