If a decrease in price leads to a decrease in total revenue,
A)demand is elastic.
B)demand is inelastic.
C)demand is unit elastic
D)there is not enough information to determine the elasticity of demand.

Question

Quizplus · Accepted Answer

When demand is inelastic, a decrease in price leads to a decrease in total revenue because the percentage change in quantity demanded is less than the percentage change in price. This means consumers are not very responsive to price changes, so the decrease in price does not lead to a sufficiently large increase in quantity demanded to offset the lower price, resulting in lower total revenue.

If a Decrease in Price Leads to a Decrease in Total