PRC-3 · Chapter 11 · Question 12 of 57
A manager notices that lowering the price of their software slightly caused a massive influx of new buyers, resulting in total revenue jumping from Rs. 1 million to Rs. 1.5 million. According to the total expenditure method, the demand is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Elastic
Explanation
When a price decrease leads to an increase in total expenditure/revenue, the quantity effect outweighed the price effect, indicating that demand is elastic.
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