ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If a firm lowers its price and its total revenue increases as a result, this means that the percent change in quantity demanded is greater than the percent change in the price. Because the quantity demanded is changing more than the change in price, the demand curve is elastic.

Detailed explanation-2: -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-3: -Answer and Explanation: D. The number of close substitutes for the good increases.

Detailed explanation-4: -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-5: -Answer and Explanation: Option C) is correct: price increase and demand is inelastic. The inelastic demand depicts the (%) price change is more than the change in quantity demanded. In this situation, when the price increases, the quantity demanded falls by less level, leading to an increase in total revenue.