Walter provides lawn-cutting services and notices that his total revenue increases when he cuts prices. The elasticity of demand for his services is:
A) unit elastic.
B) inelastic.
C) perfectly inelastic.
D) elastic.

Question

Quizplus · Accepted Answer

If Walter's total revenue increases when he cuts prices, it means that demand for his services is relatively sensitive to price changes. This implies that the elasticity of demand is greater than 1, which falls under the category of elastic demand. Therefore, the correct answer is D.

Walter Provides Lawn-Cutting Services and Notices That His Total Revenue