Which of the following is not true regarding a price elastic demand curve?
A) Total revenue increases when price falls.
B) The absolute value of price elasticity is a fraction less than 1.
C) The absolute value of price elasticity is greater than 1.
D) The percentage changes in quantity exceed the percentage changes in price for any small change in price.

Question

Quizplus · Accepted Answer

A price elastic demand curve means that the absolute value of price elasticity is greater than 1 (option C), indicating that the percentage change in quantity demanded is greater than the percentage change in price (option D). This leads to an increase in total revenue when the price falls (option A). Therefore, option B is not true for a price elastic demand curve, as it describes a price inelastic demand situation where the absolute value of price elasticity is less than 1.

Which of the Following Is Not True Regarding a Price