Which of the following describes a situation in which demand must be elastic?
A) The price of pens rises by 10 cents, and quantity of pens demanded falls by 50.
B) The price of pens rises by 10 cents, and total revenue rises.
C) A 20 percent increase in the price of pens leads to a 20 percent decrease in the quantity of pens demanded.
D) Total revenue does not change when the price of pens rises.
E) Total revenue decreases when the price of pens rises.

Question

Quizplus · Accepted Answer

When demand is elastic, an increase in price leads to a decrease in total revenue, as the percentage drop in quantity demanded is greater than the percentage increase in price.

Which of the Following Describes a Situation in Which Demand