Which of the following statements about price elasticity is false?
A) Steak is an example of a product that has an elastic demand for most people, because when price goes up quantity demanded goes down.
B) Elasticity of demand is the relative responsiveness of a change in quantity demanded to change in price.
C) If marketers can determine price elasticity, then setting prices at optimum levels is much easier.
D) When price is raised on a product that has an inelastic demand, then total revenue will decrease.
E) Electricity is an example of a product that has elastic demand.

Question

Quizplus · Accepted Answer

When price is raised on a product that has an inelastic demand, total revenue will actually increase, not decrease, because the quantity demanded does not significantly drop with a price increase.

Which of the Following Statements About Price Elasticity Is False