Holding all other factors constant,if raising the price of a good results in less total revenue,what must the demand for the good be
A)unit elastic
B)inelastic
C)elastic
D)perfectly inelastic

Question

Quizplus · Accepted Answer

If raising the price of a good results in less total revenue, the demand for the good must be elastic. This is because when the price increases, consumers are sensitive and reduce their quantity demanded significantly. As a result, the decrease in revenue from selling fewer units outweighs the increase in revenue from the higher price. In contrast, if the demand for the good were inelastic, an increase in price would lead to a less significant decrease in quantity demanded and total revenue would increase due to the higher price per unit sold.

Holding All Other Factors Constant,if Raising the Price of a Good