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4. Problems and Applications Q4 A price change causes the quantity demanded of a good to increase by 12%, while the total revenue of that good decreases by 16%. True or False: The demand curve is elastic in this region. True False

Respuesta :

Answer:

False

Explanation:

Demand is inelastic

Demand is inelastic if a change in price has little or no effect on quantity demanded. The coefficient of elasticity is less than one because the percentage change in price is greater than the percentage change in quantity demanded

If demand is inelastic and prices fall, the quantity demanded would rise. But the rise in quantity demanded is less than the price reduction. Therefore, total revenue would fall.

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