Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Elastic
B
Inelastic
C
Unit Elastic
D
Perfectly Inelastic
Understanding the Answer
Let's break down why this is correct
Answer
When the price of a product decreases and total revenue increases, the demand for that product is classified as elastic. This means that consumers are very responsive to price changes; when the price goes down, many more people want to buy the product. For example, if the price of a popular snack drops from $2 to $1, more people might buy it, leading to higher overall sales and revenue. In this case, the percentage increase in quantity sold is greater than the percentage decrease in price. Therefore, we can say that the demand is elastic because the change in price has a significant effect on how much people are willing to buy.
Detailed Explanation
When the price goes down and sales go up, people really want the product. Other options are incorrect because Some might think that lower prices always mean more sales; Unit elastic means that price changes do not affect total revenue.
Key Concepts
total revenue
Topic
Price Elasticity and Revenue
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.