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3 years ago

Elastic demand exists when:

Business

1 answer:

arlik [135]3 years ago

6 0

Answer:

B. a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases.

Explanation:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Elasticity of demand = percentage change in quantity demanded / percentage change in price

Demand is elastic if a small percentage decrease in price produces a larger percentage increase in quantity demanded . Total revenue would increase because the percentage increase in Quanitity demanded exceeds the percentage decrease in price.

If demand is elastic, a small percentage increase in price produces a larger percentage decrease in quantity demanded and total revenue increases.

Here, total revenue falls because percentage decrease in price exceeds the percentage increase in price.

Demand is inelastic if a small percentage decrease in price produces a smaller percentage increasein quantity demanded.

Demand is perfectly inelastic if the quantity demanded remains the same regardless of level of price.

I hope my answer helps you

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