If a price reduction leads to larger total revenue, demand is
A)perfectly inelastic
B)inelastic
C)unit elastic
D)elastic
E)perfectly elastic

Question

Quizplus · Accepted Answer

If a price reduction leads to a larger total revenue, it indicates that the demand is elastic. Inelastic demand means that a price reduction will not lead to a significant increase in total revenue, while unit elastic demand means that a price reduction will only lead to a proportional increase in total revenue. Elastic demand, on the other hand, means that a price reduction leads to a relatively larger increase in total revenue.

If a Price Reduction Leads to Larger Total Revenue, Demand