If a firm lowers the price of a product when demand is elastic, then the firm should expect total revenue to
A)fall.
B)rise.
C)remain the same.
D)become zero.
E)rise and then fall.

Question

Quizplus · Accepted Answer

When demand is elastic, a decrease in price will lead to an increase in the quantity demanded, which will increase total revenue. This is because the percentage increase in quantity demanded will be greater than the percentage decrease in price, resulting in a net increase in revenue.

If a Firm Lowers the Price of a Product When