Asked by Talin Mirzaei on Jun 11, 2024
Verified
Price and total revenue are inversely related when demand is
A) price elastic.
B) price inelastic.
C) unit price elastic.
D) perfectly price inelastic.
Price Elastic
An assessment of the influence that price changes have on the consumer's purchasing volume of a good.
Inversely Related
A relationship between two variables where one increases as the other decreases.
- Grapple with the association of demand elasticity in relation to total revenue.
- Clarify the distinguishing characteristics between elastic, inelastic, and unit elastic demand.
Verified Answer
EC
Elizabeth CohoonJun 15, 2024
Final Answer :
A
Explanation :
When demand is price elastic, a decrease in price leads to a larger percentage increase in quantity demanded, which increases total revenue, and vice versa. This indicates an inverse relationship between price and total revenue.
Learning Objectives
- Grapple with the association of demand elasticity in relation to total revenue.
- Clarify the distinguishing characteristics between elastic, inelastic, and unit elastic demand.
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