Question
Download Solution PDFIn the case of elastic demand, when the price rises-
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is total revenue will decrease.
Key Points
- In the case of elastic demand, the rise in price will result in rapid decrease in the demand, hence the total revenue will decrease.
- Total Revenue = Price × Demand
- Generally, price and total revenue have a negative relationship when demand is elastic, which means rise in price will lead to decrease in total revenue.
- However, If price and demand change by the same percentage then total revenue does not change.
- Elastic demand means with change in the price of the product, demand will change drastically.
Last updated on Jul 9, 2025
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