If total revenues decline when the market clearing price increases, then we know that
A) demand is inelastic.
B) demand is elastic.
C) demand is unit-elastic.
D) demand has zero elasticity.

Question

Quizplus · Accepted Answer

When total revenues decline with an increase in the market clearing price, it means that the demand for the product is sensitive to price changes, which indicates elastic demand. Therefore, the correct answer is B.

If Total Revenues Decline When the Market Clearing Price Increases