Suppose you observe that as a TV manufacturer increases its price its total revenue decreases. This could be due to
A) demand being price inelastic.
B) demand being price elastic.
C) demand being unit elastic.
D) demand being perfectly price inelastic.

Question

Quizplus · Accepted Answer

If the manufacturer's total revenue is decreasing as they increase their price, it implies that the demand for the product is responsive to the price change, which is known as price elasticity of demand. Therefore, the best choice would be B. If the demand were price inelastic (A), unit elastic (C), or perfectly price inelastic (D), then the total revenue would not change in response to a price increase, and the scenario described would not occur.

Suppose You Observe That as a TV Manufacturer Increases Its