When total revenue and price are inversely related, demand is
A) unit-elastic.
B) inelastic.
C) elastic.
D) not related.

Question

Quizplus · Accepted Answer

When total revenue and price are inversely related, demand is said to be elastic. This means that a change in price will result in a proportionally larger change in quantity demanded, thus affecting total revenue. In contrast, when total revenue and price are directly related, demand is said to be inelastic. In this case, a change in price will result in a proportionally smaller change in quantity demanded, so total revenue may not be affected as much.

When Total Revenue and Price Are Inversely Related, Demand Is