PRC-3 · Chapter 11 · Question 56 of 57
A shopkeeper raises the price of his premium notebooks. However, he subsequently notices that his Total Revenue has actually fallen. This indicates that the demand for the notebooks was:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Relatively elastic
Explanation
If raising the price causes total revenue to fall, it means consumers aggressively abandoned the product (quantity fell by a massive percentage), proving demand is elastic.
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