If the demand for a good is elastic, then:
A) revenues increase when the price goes up.
B) revenues decrease when the price goes up.
C) any change in price is matched by an equal and opposite percentage change in quantity, so revenues stay the same.
D) revenues decrease regardless of the direction of the price change.

Question

Quizplus · Accepted Answer

Elastic demand means that the quantity demanded is highly responsive to changes in price. Therefore, if the price goes up, consumers will likely decrease their quantity demanded, leading to a decrease in revenues. Conversely, if the price goes down, consumers will likely increase their quantity demanded, leading to an increase in revenues.

If the Demand for a Good Is Elastic, Then