An increase in the price of a good will cause total revenue to fall if price elasticity of demand is:
A) elastic.
B) inelastic.
C) unitary elastic.
D) perfectly elastic.

Question

Quizplus · Accepted Answer

When price elasticity of demand is elastic, a small increase in price will cause a large decrease in quantity demanded. This means that the total revenue earned by the seller will fall, as the increase in price is not enough to offset the decrease in quantity demanded.

An Increase in the Price of a Good Will Cause