Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Inelastic: Increases with price increase
B
Elastic: Decreases with price increase
C
Unit Elastic: Remains constant with price increase
D
Inelastic: Decreases with price increase
Understanding the Answer
Let's break down why this is correct
Answer
The relationship between price and quantity demanded can show us how total revenue changes when prices change. When demand is elastic, a small decrease in price leads to a large increase in the quantity demanded, which can increase total revenue. For example, if a store sells candy for $1 and sells 100 bars, its total revenue is $100. If the price drops to $0. 80 and sales increase to 150 bars, total revenue rises to $120, showing that the demand was elastic.
Detailed Explanation
When demand is inelastic, people buy about the same amount even if the price goes up. Other options are incorrect because This answer suggests that when prices go up, total revenue goes down; This option says total revenue stays the same when prices change.
Key Concepts
Demand Elasticity
Total Revenue
Price Changes
Topic
Understanding Demand Elasticity
Difficulty
hard 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.