What happens when demand is elastic in the current price range
A)An increase in price would increase total revenue because the decrease in quantity demanded is less than the increase in price.
B)An increase in price would decrease total revenue because the decrease in quantity demanded is greater than the increase in price.
C)A decrease in price would decrease total revenue because the increase in quantity demanded is smaller than the decrease in price.
D)A decrease in price would not affect the total revenue.

Question

Quizplus · Accepted Answer

When demand is elastic in the current price range, an increase in price would lead to a greater decrease in quantity demanded. As a result, the decrease in quantity would offset any increase in price, leading to a decrease in total revenue. This is because consumers are highly responsive to changes in price and would be deterred by a significant increase. Therefore, a decrease in price would increase total revenue as the increase in quantity demanded is greater than the decrease in price.

What Happens When Demand Is Elastic in the Current Price