If a change in price causes total revenue to change in the same direction, we can conclude that the demand is:
A) price inelastic.
B) price elastic.
C) unit price elastic.
D) normal.

Question

Quizplus · Accepted Answer

When a change in price causes total revenue to change in the same direction, it indicates that demand is relatively insensitive to changes in price, which means that the demand is price inelastic. This can occur when there are fewer substitutes available, when the good is a necessity, or when the proportion of income spent on the good is small.

If a Change in Price Causes Total Revenue to Change