The "Cherries for all" farm is selling cherries at $3 per pound and earns a total revenue of $300.The manager decides to increase the price to $4 per pound,but his decision reduces the total revenue to $240.Which of the following is a good explanation for what happened?

Question

Quizplus · Accepted Answer

The decrease in total revenue indicates that the price elasticity of demand for cherries is greater than 1, which means that the demand for cherries is elastic. As the price is increased, the quantity demanded decreases enough to more than offset the increase in price, leading to a decrease in total revenue.

The "Cherries for All" Farm Is Selling Cherries at $3