Asked by Jessica Redding on Jun 13, 2024
Verified
Other things the same, if a price change causes total revenue to change in the opposite direction, demand is
A) perfectly inelastic.
B) relatively elastic.
C) relatively inelastic.
D) of unit elasticity.
Total Revenue
The sum of money a company earns from selling its products or services, prior to deducting any costs.
Elastic
Describes a situation in which the quantity demanded or supplied of a good or service changes significantly as its price changes.
Inelastic
A characteristic of goods whereby a change in price leads to a relatively smaller change in the quantity demanded or supplied.
- Comprehend the principle of price elasticity of demand.
- Uncover the association between elasticity and aggregate revenue.
Verified Answer
SM
Sanat MadhokJun 15, 2024
Final Answer :
B
Explanation :
When a price change causes total revenue to change in the opposite direction, it indicates that the percentage change in quantity demanded is greater than the percentage change in price, which is a characteristic of relatively elastic demand.
Learning Objectives
- Comprehend the principle of price elasticity of demand.
- Uncover the association between elasticity and aggregate revenue.