An auto rental company lowers the price of its rentals to increase its market share. The price cut increases quantity demanded, but total revenue decreases. This result suggests that over this price range, the demand for the auto rentals is

Question

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When a price cut leads to a decrease in total revenue, it suggests that the demand is inelastic. Inelastic demand means that the percentage change in quantity demanded is less than the percentage change in price, resulting in a decrease in total revenue when prices are lowered.

An Auto Rental Company Lowers the Price of Its Rentals