If prices rise substantially on peanut butter and total revenue decreases significantly, then peanut butter is probably:
A) elastic.
B) inelastic.
C) unit elastic.
D) absolute.

Question

Quizplus · Accepted Answer

When the price of a good increases and total revenue decreases, it indicates that the demand for the good is elastic. This means consumers are sensitive to price changes and will significantly reduce their quantity demanded in response to a price increase.

If Prices Rise Substantially on Peanut Butter and Total Revenue