Remembering that demand elasticity is defined as the percentage change in quantity divided by the percentage change in price,if price decreases and,in percentage terms,quantity rises more than price has dropped,total revenue will
A)increase.
B)decrease.
C)remain the same.
D)either increase or decrease.

Question

Quizplus · Accepted Answer

When quantity rises more than price has dropped, demand is said to be elastic. This means that the percentage change in quantity is greater than the percentage change in price. As a result, when the price is decreased, total revenue will increase. This is because the increase in sales (quantity) more than offsets the decrease in price, leading to a higher total revenue.

Remembering That Demand Elasticity Is Defined as the Percentage Change