Holding all other forces constant,if increasing the price of a good leads to a decrease in total revenue,then the demand for the good must be
A)unit elastic.
B)inelastic.
C)elastic.
D)None of the above is correct because a price increase always leads to an decrease in total revenue.

Question

Quizplus · Accepted Answer

If an increase in price leads to a decrease in total revenue, it means that the percentage decrease in quantity demanded is greater than the percentage increase in price. This indicates that the demand for the good is relatively sensitive to price changes, which is the definition of elastic demand. Therefore, choice C is the best answer.

Holding All Other Forces Constant,if Increasing the Price of a Good