When demand is price inelastic, a fall in price causes total revenue to fall, because the increase in quantity sold is not large enough to offset the drop in price.

Question

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When demand is price inelastic, the percentage change in quantity demanded is less than the percentage change in price, meaning a fall in price leads to a smaller increase in quantity sold, which decreases total revenue.

When Demand Is Price Inelastic, a Fall in Price Causes