Final answer:
The correct answer is d. The demand for TVs is elastic, indicated by a 5% increase in quantity demanded when the price decreases by 2%, leading to an increase in total revenue.
Step-by-step explanation:
The demand for TVs is elastic, and total revenue from TV sales will increase. When the price of TVs decreases by 2%, and the quantity demanded increases by 5%, the percentage change in quantity demanded is greater than the percentage change in price. This indicates elasticity because the quantity demanded is responsive to the price change.
In cases of elastic demand, if the price decreases, the proportionate increase in quantity demanded is greater, leading to an increase in total revenue. On the other hand, inelastic demand would mean that the quantity demanded doesn't change as much in response to price changes, and unit elastic would indicate that the percent change in demand is exactly the same as the percent change in price. Since the change in quantity (5%) is higher than the change in price (2%), the demand is considered elastic, leading to increased total revenue.