Asked by Yadelis Carmona gonzalez on Jun 12, 2024
Verified
Which of the following statements is not correct?
A) If the relative change in price is greater than the relative change in the quantity demanded associated with it, demand is inelastic.
B) In the range of prices in which demand is elastic, total revenue will diminish as price decreases.
C) Total revenue will not change if price varies within a range where the elasticity coefficient is unity.
D) Demand tends to be elastic at high prices and inelastic at low prices.
Relative Change
A metric that measures how much a particular quantity has changed over time relative to the initial amount.
Inelastic
A characteristic of a good or service whose demand or supply is relatively unresponsive to changes in price.
Elastic
A characteristic of a product or service that indicates its demand or supply significantly changes with a change in price.
- Acquire knowledge on the idea of price elasticity of demand.
- Understand the interrelation between elasticity and total monetary returns.
Verified Answer
MD
Manpreet DhillonJun 12, 2024
Final Answer :
B
Explanation :
Statement B is incorrect because in the range of prices where demand is elastic, total revenue actually increases as price decreases. This is because the percentage increase in quantity demanded is greater than the percentage decrease in price, leading to an overall increase in total revenue.
Learning Objectives
- Acquire knowledge on the idea of price elasticity of demand.
- Understand the interrelation between elasticity and total monetary returns.