Elastic demand means that a change in price will result in a larger change in quantity demanded. This is reflected in choice A, which states that a given percentage increase in price will cause quantity to decrease by a larger percentage.

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With Elastic Demand

Question 34

Multiple Choice

With elastic demand:

A) a given percentage increase in price causes quantity to decrease by a larger percentage.
B) |e_P| > 1 and the relative change in quantity is smaller than the relative change in price.
C) a price increase raises total revenue
D) A price decrease causes total revenues to fall.

Correct Answer: