If a decrease in the price of a good causes an increase in total revenue, the demand for the good is price inelastic.

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If a decrease in price causes an increase in total revenue, the demand for the good is price elastic, because the increase in quantity demanded is greater than the decrease in price, resulting in a larger increase in total revenue. In contrast, in price inelastic demand, a decrease in price causes a smaller increase in quantity demanded, resulting in a decrease in total revenue.

If a Decrease in the Price of a Good Causes