The demand for a good is price elastic if
A)a rise in price increases total revenue.
B)a fall in price decreases total revenue.
C)a rise in price decreases total revenue.
D)the good is a necessity.
E)the demand for the good is very insensitive to changes in price.

Question

Quizplus · Accepted Answer

The demand for a good is price elastic when a rise in price decreases total revenue. This means that consumers are sensitive to changes in price and are willing to switch to substitutes or reduce their quantity demanded when the price goes up, leading to a decrease in total revenue for the sellers. On the other hand, if a rise in price increases total revenue, the demand is price inelastic, indicating that consumers are less sensitive to price changes, and will continue to buy the good even at a higher price.

The Demand for a Good Is Price Elastic If