Asked by Brandon Underhill on Jul 28, 2024
Verified
Price and total revenue move in the same direction when demand is
A) price elastic.
B) price inelastic.
C) unit price elastic.
D) perfectly price elastic.
Price Inelastic
Describes a situation where the demand for a good or service is relatively unresponsive to changes in price.
Same Direction
In the context of relationships or trends, indicates movement or change that is parallel or congruent between two or more variables or entities.
- Apprehend the bond between demand elasticity and total financial gain.
- Highlight the variances between elastic demand, inelastic demand, and demand that is unit elastic.
Verified Answer
YG
Yissel GomezJul 30, 2024
Final Answer :
B
Explanation :
When demand is price inelastic, it means that the percentage change in quantity demanded is less than the percentage change in price. Therefore, when price increases, total revenue also increases because the decrease in quantity demanded is not enough to offset the increase in price. Conversely, when price decreases, total revenue decreases because the increase in quantity demanded does not compensate for the lower price. This is why price and total revenue move in the same direction when demand is price inelastic.
Learning Objectives
- Apprehend the bond between demand elasticity and total financial gain.
- Highlight the variances between elastic demand, inelastic demand, and demand that is unit elastic.
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