If total revenue rises as a result of a decrease in the price of a given good, it follows that demand is
A)inelastic.
B)perfectly inelastic.
C)elastic.
D)unit elastic.

Question

Quizplus · Accepted Answer

If total revenue increases due to a decrease in price, it indicates that demand for the good is elastic. This means that consumers are responsive to changes in price and will buy more of the good at a lower price, resulting in an overall increase in revenue. If demand were inelastic, a decrease in price would not result in a significant increase in quantity demanded, leading to a decrease in total revenue.

If Total Revenue Rises as a Result of a Decrease