If the price elasticity of demand for apples is greater than 1, an increase in apple prices will
A) raise total revenue.
B) lower total revenue.
C) not affect total revenue.
D) either raise or lower total revenue, but it is impossible to determine which.

Question

Quizplus · Accepted Answer

If the price elasticity of demand for apples is greater than 1, it implies that a 1% increase in price will lead to more than a 1% decrease in quantity demanded. Therefore, an increase in price will lead to a decrease in total revenue, as the increase in revenue from each apple sold is more than offset by the decrease in the number of apples sold.

If the Price Elasticity of Demand for Apples Is Greater