If the demand for a good is price-elastic, a cut in price will: A) lead to an in

ID: 1123168 • Letter: I

Question

If the demand for a good is price-elastic, a cut in price will:

A) lead to an increase in quantity demanded and an increase in the firm’s revenue.

B) not affect the total revenue of the firm.

C) lead to a fall in the firm’s revenue but an increase in quantity demanded.

D) lead to a decrease in quantity demanded.

E) decrease the firm’s revenue by the same percentage as the cut in price.

A) lead to an increase in quantity demanded and an increase in the firm’s revenue.

B) not affect the total revenue of the firm.

C) lead to a fall in the firm’s revenue but an increase in quantity demanded.

D) lead to a decrease in quantity demanded.

E) decrease the firm’s revenue by the same percentage as the cut in price.

Answer

A) lead to an increase in quantity demanded and an increase in the firm’s revenue.

the elasticity of demand is sensitiveness of the quantity because of the change in price

if the demand is elastic then the quantity change is higher than price change in proportion to the total revenue increases if the price is decreased.

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