If an 8 percent decrease in price leads to a 4 percent increase in the quantity demanded of the good, as a result of the price change, the total revenue for this product will________ .
A)not change
B)increase
C)double
D)decrease

Question

Quizplus · Accepted Answer

The price elasticity of demand is inelastic (less than 1) because the percentage change in quantity demanded (4%) is less than the percentage change in price (8%). Therefore, total revenue decreases when price decreases.

If an 8 Percent Decrease in Price Leads to a 4