The total revenue/expenditure rule of elasticity suggests that when price and total revenue go
A)in opposite directions, demand is elastic.
B)in same direction, demand is elastic.
C)in opposite directions, demand is inelastic.
D)to infinity, demand is perfectly inelastic.

Question

Quizplus · Accepted Answer

According to the total revenue/expenditure rule of elasticity, when price and total revenue move in opposite directions, demand is elastic. This means that when the price of a good increases, the quantity demanded decreases, causing a decrease in total revenue. On the other hand, when the price of a good decreases, the quantity demanded increases, causing an increase in total revenue. Therefore, the best choice is A.

The Total Revenue/expenditure Rule of Elasticity Suggests That When Price