On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:
A) decreases quantity demanded.
B) will increase total revenue.
C) will decrease total revenue.
D) raises the price elasticity of demand.

Question

Quizplus · Accepted Answer

When the price elasticity of demand is less than 1, a decrease in price will lead to a smaller percentage increase in the quantity demanded. As a result, the decrease in price will lead to a decrease in total revenue, as the decrease in price is not enough to offset the decrease in quantity demanded.

On a Part of the Demand Curve Where the Price