Suppose that at the price dollars the demand for a product is elastic. If the price is decreased, what will happen to revenue?
A) increase
B) decrease
C) stay the same

Question

Suppose that at the price  dollars the demand for a product is elastic. If the price is decreased, what will happen to revenue?
A) increase 
B) decrease 
C) stay the same

Quizplus · Accepted Answer

If demand is elastic, a decrease in price will result in a proportionally larger increase in quantity demanded. This means that total revenue will increase since the increase in quantity demanded will outweigh the decrease in price. Therefore, a decrease in price will lead to an increase in revenue.

Suppose That at the Price Dollars the Demand for a Product