Question

Demand is elastic when a price​ ________ results in total revenue​ ________.

A. ​rise, increasing

B. ​fall; remaining constant

C. ​fall, decreasing

D. ​rise, decreasing

Answer 1

Demand is elastic when a price rise results in decreasing total revenue.

Elastic demand is a case when consumers are very sensitive to rise in prices as %change in quantity demanded > %change in price which means that a little change in price cause decrease in quantity demanded. Elastic goods are luxury goods which can be compromised when its price rises which results in fall in total revenue.

Option D is correct.