Final answer:
A one percent decrease in price will decrease total revenue for product B, which has a price elasticity of demand less than 1, indicating an inelastic demand. It may also decrease revenue for product C, with an elasticity of 0.92, close to 1 but still inelastic. Products A and D will likely see an increase in total revenue since they have elastic demands.
Step-by-step explanation:
If the price elasticity of demand is 1.44, 0.36, 0.92, and 2.58 for products A, B, C, and D respectively, then we must consider what these values mean when a one percent decrease in price occurs. The price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
When the elasticity is greater than 1, the product is said to be elastic, which means that the percentage change in quantity demanded is larger than the percentage change in price. For products with an elasticity less than 1, the product is described as inelastic, meaning the percentage change in quantity demanded is smaller than the percentage change in price. If the elasticity equals 1, the product is said to be unit elastic.
For products A, B, C, and D, we can see that products A and D, with elasticities of 1.44 and 2.58 respectively, are elastic. A one percent decrease in price would lead to a more than proportionate increase in quantity demanded, thus increasing total revenue (TR). However, products B and C are inelastic, with elasticities of 0.36 and 0.92. A one percent decrease in price for product B would lead to a less than proportionate increase in quantity demanded, thus decreasing TR. For product C, it is close to unitary but still considered inelastic, so the decrease in price would likely lead to a decrease in TR.
In conclusion, a one percent decrease in price will decrease total revenue for product B, and possibly for product C but not for products A and D.