When demand is elastic, a fall in price causes total revenue to rise because
A)when price falls, quantity sold increases so total revenue automatically rises.
B)the increase in quantity sold is large enough to offset the lower price.
C)the percentage increase in quantity demanded is less than the percentage fall in price.
D)the demand curve shifts.

Question

Quizplus · Accepted Answer

When demand is elastic, a fall in price causes a larger increase in quantity demanded. Therefore, even though the price is lower, the increase in quantity sold is large enough to offset the lower price, resulting in a higher total revenue.

When Demand Is Elastic, a Fall in Price Causes Total