Total revenue declines when prices are increased, but total revenue increases when prices are lowered with ___ demand.
A) unitary
B) elastic
C) inelastic
D) the law of

Question

Quizplus · Accepted Answer

This scenario describes elastic demand, where the quantity demanded responds significantly to price changes. If demand is elastic, increasing prices will lead to a proportionally larger decrease in quantity demanded, reducing total revenue, and decreasing prices will lead to a proportionally larger increase in quantity demanded, increasing total revenue.

Total Revenue Declines When Prices Are Increased, but Total Revenue