If a 10 percent cut in price causes a 15 percent increase in sales, then:
A) total revenue will decrease.
B) demand is price inelastic in this range.
C) demand is price elastic in this range.
D) demand is unit elastic in this range.
E) total revenue will remain the same.

Question

Quizplus · Accepted Answer

The 15 percent increase in sales shows that demand is responsive to the price change, meaning it is price elastic. A price cut led to a higher percentage increase in quantity demanded, resulting in an overall increase in revenue. Therefore, total revenue will increase due to the price cut.

If a 10 Percent Cut in Price Causes a 15