A 10% decrease in the price of energy bars leads to a 20% increase in the quantity of energy bars demanded. It appears that:
A)demand is inelastic and total revenue will decrease.
B)demand is inelastic and total revenue will increase.
C)demand is elastic and total revenue will decrease.
D)demand is elastic and total revenue will increase.

Question

A 10% decrease in the price of energy bars leads to a 20% increase in the quantity of energy bars demanded. It appears that:
A)​demand is inelastic and total revenue will decrease.
B)​demand is inelastic and total revenue will increase.
C)​demand is elastic and total revenue will decrease.
D)​demand is elastic and total revenue will increase.

Quizplus · Accepted Answer

A 10% decrease in price leads to a 20% increase in quantity demanded, indicating that demand is elastic. When demand is elastic, a decrease in price leads to an increase in total revenue. Therefore, total revenue will increase.

A 10% Decrease in the Price of Energy Bars Leads