If price elasticity of demand is zero, then as the price falls,
A)total revenue does not change.
B)quantity demanded does not change.
C)quantity demanded falls to zero.
D)total revenue increases.
E)quantity demanded increases.

Question

Quizplus · Accepted Answer

If price elasticity of demand is zero, it means that the quantity demanded is completely insensitive to changes in the price. Therefore, as the price falls, quantity demanded does not change. This means that total revenue will remain the same, as it is calculated as the price multiplied by the quantity demanded. Thus, option A and D are incorrect. Option C is also incorrect, as quantity demanded will not fall to zero. Option E is incorrect as quantity demanded will not increase.

If Price Elasticity of Demand Is Zero, Then as the Price