CMA 694 1-6, If a product's demand is elastic and there is a decrease in price, how will be the effect?

D.
an increase in total revenue.
If demand is elastic, then a decrease in price will result in an increase in demand and thus an increase in total revenue.

Answer (D - An increase in total revenue) is correct.
The concept of price elasticity is of great practical concern to management accountants because a knowledge of elasticity tells the accountant whether a price change will increase or decrease total revenue.
If the demand elasticity is greater than one (i.e., the product is elastic), a price decrease will cause an increase in total revenue because the demand increases by a greater percentage than the price decreases.

It will lead to an increase in the total revenue. For example the demand for an LED TV is elastic. When its price decreases it will become affordable to more people and more would be demanded. Leading to more sales and revenue. In contrast the demand for salt is inelastic. Even if its price decreases more salt would not be consumed. As people would not eat more salt. Hence revenue will not increase.

c

A decrease in the price of a good normally results in an increase in the quantity demanded by consumers because of the Law Of Demand. the result of quantity demanded will result in increase in company's revenues.