Question

G If demand is elastic,

a: fall in the price increases the total revenue.
rise in price increases the total revenue.
fall in the price leaves the total revenue unchanged.
fall in price decreases the total revenue.

Answer 1

Answer: a. fall in the price increases the total revenue

Step-by-step explanation:

When Demand is considered Elastic, the quantity demanded of a good changes by a larger percentage than the change in price.

That means that if the price rises, there is a greater reduction in Quantity Demanded then the price.

Conversely, if there is a Price reduction, the Quantity Demanded increases more than the price reduction.

Using the Total Revenue Formula (quantity of goods sold multiplied by the price of the good) then, revenue will rise.

I have attached a graph that shows the impact of prices changing and it's effect on Quantity Demanded. Notice how wider the spaces between the Quantity Demanded and the Prices are.

Answer 2

a: fall in the price increases the total revenue.

Step-by-step explanation:

Demand is elastic if a small change in price has a greater effect on the quantity demanded. Coefficient of demand is usually greater than 1.

If demand is elastic and price is reduced, the quantity demanded increases and total revenue increases.

If demand ins elastic and price is increased, the quantity demanded falls and total revenue falls.

I hope my answer helps you