ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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unit elastic
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elastic
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inelastic
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None of the above
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Detailed explanation-1: -If price and quantity demanded change by the same percentage (i.e., if demand is unit price elastic), then total revenue does not change.
Detailed explanation-2: -In the elastic region, the percentage change in quantity demanded is greater than the percentage change in price, so raising the price in this region of the demand curve will decrease total revenue while lowering the price increases total revenue.
Detailed explanation-3: -When the demand is elastic, it means that a percentage change in the price will change the quantity demanded by the same amount. Therefore, if demand is unitary elastic, the total revenue will remain unchanged following a change in price.
Detailed explanation-4: -If demand is elastic, then a price increase reduces the total revenue. When the price increases, then the demand falls by a considerable percentage. Then, total revenue starts moving in contradictory directions. Therefore, total income declines when the price of any commodity rises.
Detailed explanation-5: -b) If demand is price elastic, then decreasing price will increase revenue.