Under which of the following situations will total revenue fall? A)If elasticity is 1 and price falls. B)If elasticity is 1 and price rises. C)If elasticity is

Question

Under which of the following situations will total revenue fall?
A)If elasticity is > 1 and price falls.
B)If elasticity is > 1 and price rises.
C)If elasticity is < 1 and price rises.
D)If elasticity is = 1 and price falls.

Quizplus · Accepted Answer

When elasticity is greater than 1, a decrease in price will lead to a proportionately larger increase in quantity demanded. As a result, the total revenue will increase. Conversely, when the price is increased, the quantity demanded decreases more than proportionately, leading to a decrease in total revenue.

Under Which of the Following Situations Will Total Revenue Fall