If demand is ________,a price cut ________ the total revenue.
A) elastic; increases
B) unit elastic; decreases
C) inelastic; increases
D) inelastic; does not change
E) normal; decreases

Question

Quizplus · Accepted Answer

If demand is elastic (meaning a small change in price leads to a proportionately larger change in quantity demanded), then a price cut will increase total revenue because the increase in quantity demanded will more than make up for the decrease in price. This is because the increase in revenue from selling more units outweighs the decrease in revenue from selling each unit at a lower price.

If Demand Is ________,A Price Cut ________ the Total Revenue

If Demand Is ,A Price Cut the Total Revenue