If consumers' sensitivity to price changes makes demand elastic, then a price decrease leads to:
A) an increase in supply.
B) an increase in total revenue.
C) a decrease in total revenue.
D) a decrease in supply.

Question

Quizplus · Accepted Answer

When demand is elastic, a decrease in price leads to a proportionally larger increase in the quantity demanded, which increases total revenue.

If Consumers' Sensitivity to Price Changes Makes Demand Elastic, Then