A 10% decrease in the price of energy bars leads to a 20% increase in the quantity of energy bars demanded.It appears that:
A)demand is inelastic and total revenue will decrease.
B)demand is inelastic and total revenue will increase.
C)demand is unit elastic and total revenue will remain constant.
D)demand is elastic and total revenue will decrease.
E)demand is elastic and total revenue will increase.

Question

Quizplus · Accepted Answer

A 10% decrease in price leads to a 20% increase in quantity demanded, indicating a relatively strong response from consumers, suggesting that demand is elastic. When demand is elastic, a decrease in price leads to an increase in total revenue. Therefore, the total revenue will increase with the given scenario.

A 10% Decrease in the Price of Energy Bars Leads