A product has elastic demand if, when price rises, total revenue (or total consumer expenditures) falls.

Question

Quizplus · Accepted Answer

Elastic demand means that consumers are responsive to price changes, so when the price of a product increases, they will decrease their quantity demanded. This leads to a decrease in total revenue as the decrease in quantity sold outweighs the increase in price. In contrast, inelastic demand means consumers are less responsive to price changes, so a price increase will lead to a smaller decrease in quantity demanded and may even result in an increase in total revenue.

A Product Has Elastic Demand If, When Price Rises, Total