If total revenue rises as a result of a decrease in price,it follows that demand is
A) inelastic.
B) perfectly inelastic.
C) elastic.
D) unit elastic.
E) none of the above

Question

Quizplus · Accepted Answer

If total revenue rises from a decrease in price, it indicates that the demand is elastic, which means that consumers are responsive to changes in price and the quantity demanded increases at a faster rate than the price decreases. On the other hand, if total revenue decreases with a decrease in price, it indicates that the demand is inelastic, which means that consumers are relatively insensitive to changes in price and the quantity demanded changes at a slower rate than the price.

If Total Revenue Rises as a Result of a Decrease