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 customers are very sensitive to changes in price. If the price of the product is decreased, more people are likely to buy it because it becomes more affordable. As a result, the total revenue, which is the total money made from selling the product, will increase. For example, if a store sells a popular video game for $50 and lowers the price to $40, many more players might decide to buy it, leading to a higher overall sales amount. This shows that when demand is elastic, lowering the price can lead to greater 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 will make less money; It's a common mistake to think revenue stays the same.
Key Concepts
total revenue
Topic
Total Revenue and Demand Elasticity
Difficulty
easy level question
Cognitive Level
understand
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