Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Total revenue will decrease
B
Total revenue will increase
C
Total revenue will remain the same
D
Total revenue will fluctuate unpredictably
Understanding the Answer
Let's break down why this is correct
Answer
When a product's demand is elastic, it means that consumers are very sensitive to price changes. If the price of the product is decreased, more customers will want to buy it because it is now cheaper. As a result, the increase in the number of sales will be greater than the decrease in price, leading to an overall increase in total revenue. For example, if a popular toy is priced at $20 and the price drops to $15, many more children will want to buy it, and the total money earned from selling the toy will go up. Therefore, lowering the price of an elastic product usually boosts total revenue.
Detailed Explanation
When demand is elastic, people buy much more of the product if the price goes down. Other options are incorrect because Some might think lowering the price means less money overall; It's a common mistake to think that price changes don't affect revenue.
Key Concepts
total revenue
Topic
Total Revenue and Demand Elasticity
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.