question archive If the quantity effect outweighs the price effect of a price decrease, then: A
If the quantity effect outweighs the price effect of a price decrease, then: A
Subject:EconomicsPrice:2.88 Bought3
If the quantity effect outweighs the price effect of a price decrease, then:
A. the good is price elastic.
B. total revenue will rise.
C. the measured elasticity must be more than 1.
D. All of these are true.
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- The correct answer is: A. the good is price elastic.
When the quantity effect (the percentage change in the quantity demanded) outweighs the price effect of a price decrease, it means that the demand is highly responsive to the price. In this case, the coefficient of the price elasticity of demand is greater than one.
