-A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?
A) Demand is elastic.
B) Demand is unit elastic.
C) Demand is inelastic.
D) Demand is perfectly elastic.
E) Not enough information is given to conclude anything about price elasticity of demand.

Question

-A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?
A) Demand is elastic. 
B) Demand is unit elastic. 
C) Demand is inelastic. 
D) Demand is perfectly elastic. 
E) Not enough information is given to conclude anything about price elasticity of demand.

Quizplus · Accepted Answer

When a firm lowers its price and total revenue decreases, it indicates that the percentage decrease in price leads to a smaller percentage increase in quantity demanded, which is characteristic of inelastic demand.

-A Firm Lowers the Price It Charges