Price and total revenue are inversely related when demand is
A) elastic.
B) inelastic.
C) unit elastic.
D) perfectly inelastic.

Question

Quizplus · Accepted Answer

When demand is elastic, a price increase will cause a relatively larger decrease in quantity demanded, resulting in a decrease in total revenue. Similarly, a price decrease will result in a relatively larger increase in quantity demanded and an increase in total revenue. Hence, price and total revenue are inversely related when demand is elastic.

Price and Total Revenue Are Inversely Related When Demand Is