Learning Path
Question & Answer
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Total revenue increases if demand is elastic
Total revenue decreases if demand is elastic
Total revenue remains unchanged regardless of elasticity
Total revenue always decreases for inelastic demand
Understanding the Answer
Let's break down why this is correct
When the price falls, buyers buy more. Other options are incorrect because Some think revenue falls when demand is elastic, but that is wrong; Revenue does change with elasticity.
Key Concepts
Price Elasticity of Demand
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Deep Dive: Price Elasticity of Demand
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Definition
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. It quantifies how much the quantity demanded will change in percentage terms in response to a one percent change in price. Elasticity values help determine the sensitivity of demand to price fluctuations.
Topic Definition
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. It quantifies how much the quantity demanded will change in percentage terms in response to a one percent change in price. Elasticity values help determine the sensitivity of demand to price fluctuations.
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