Elastic demand exists when:
A)a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.
B)a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases.
C)an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.
D)the quantity demanded remains the same regardless of level of price and total revenue is unchange

Question

Quizplus · Accepted Answer

Elastic demand exists when a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases. This is because consumers are highly responsive to changes in price and are willing to buy more of the good as the price decreases. As a result, total revenue increases even though the price has decreased.

Elastic Demand Exists When