Holding all other forces constant,if increasing the price of a good leads to a decrease in total revenue,then the demand for the good must be
A) unit elastic.
B) inelastic.
C) elastic.
D) None of the above is correct,since a price increase always leads to an increase in total revenue.

Question

Quizplus · Accepted Answer

If increasing the price of a good leads to a decrease in total revenue, it means that the percentage decrease in quantity demanded is greater than the percentage increase in price. This is an indication that the demand for the good is elastic, meaning that consumers are sensitive to changes in price and will decrease their quantity demanded significantly in response to a price increase.

Holding All Other Forces Constant,if Increasing the Price of a Good