Question

Which of the following statements is true?
a) If the price of a good is raised and total revenue increases, demand is inelastic.
b) If the price of a good is lowered and total revenue increases, demand is inelastic.
c) If the price of a good is lowered and total revenue decreases, demand is elastic.
d) If the price of a good is raised and total revenue does not change, demand is perfectly elastic.

Answer 1

Answer: Option A

Explanation: In simple words, when the demand for a commodity did not change as per the change in its price , then such commodity is said to have inelastic demand.

In the first option the price of the good is decreased, then her demand should have decreased resulting in decrease or no change in revenue. Although it resulted in increase in revenue.

Hence from the above we can conclude that the correct option is A.

Answer 2

Answer:

If the price of a good is raised and total revenue does not change, demand is perfectly elastic ( D )

Explanation:

An elastic demand is a type of demand for a good or service that changes with changes in price of goods and services and also with changes in purchasing power of the customer while an inelastic demand is a type of demand for gods and services that is constant regardless of changes in prices and purchasing power of the customer.

if the price of a good is raised and the total revenue ( purchasing power ) does not change demand will definitely change ( perfectly elastic )