What is the effect on total revenue if demand is elastic and price rises?
A)Total revenue will fall.
B)Total revenue will rise.
C)Quantity demanded will rise.
D)Supply will rise.

Question

Quizplus · Accepted Answer

When demand is elastic, consumers are relatively sensitive to changes in price, so if the price rises, the quantity demanded will significantly decrease. As a result, the decrease in the quantity demanded will not be significant enough to compensate for the increase in price, leading to a decrease in total revenue.

What Is the Effect on Total Revenue If Demand Is