If price changes and total revenue changes in the opposite direction, demand is relatively elastic.

Question

Quizplus · Accepted Answer

This statement is a correct representation of the law of demand, which states that as the price of a good increases, the quantity demanded decreases. If the total revenue (which is the price of the good multiplied by the quantity demanded) decreases as a result of a price increase, it indicates that the demand for the good is relatively elastic, meaning that consumers are sensitive to changes in price and will reduce their purchases significantly if the price goes up.

If Price Changes and Total Revenue Changes in the Opposite