When demand is elastic, a fall in price causes total revenue to rise because
A) when price falls, quantity sold increases so total revenue automatically rises.
B) the increase in quantity sold is large enough to offset the lower price.
C) the percentage increase in quantity demanded is less than the percentage fall in price.
D) the demand curve shifts.
Answer: B
You might also like to view...
When a tariff is imposed, the demand curve for the domestic good
A) shifts downward and to the right. B) shifts upward and to the left. C) shifts upward and to the right. D) shifts downward and to the left.
The market for beef is in long-run equilibrium at a price of $3.25 per pound. The announcement that mad cow disease has been discovered in the United States reduces the demand for beef sharply, and the price falls to $2.00 per pound. If the long-run supply curve is horizontal, then when the long-run equilibrium is reestablished, the price will be:
Select one: A. $3.25 per pound. B. More information is needed to answer this question. C. $2.00 per pound. D. greater than $2.00 per pound but less than $3.25 per pound.