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If a product's demand is elastic and there is a decrease in price, the effect will be:

a) A decrease in total revenue. b) No change in total revenue. c) A decrease in total revenue and the demand curve shifts to the left. d) An increase in total revenue.

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Question added by Deleted user
Date Posted: 2014/04/07
Nudrat Saleem
by Nudrat Saleem , Resource Person , Institutions

D obviously 

Increase in total revenue 

Mohamed Imthiaz
by Mohamed Imthiaz , Vice President Finance , Emirates National Copper Factory LLC

If the demand is elastic, every price reduction will increase demand.  This will result in higher turnover assuming that the company markets the product and availability is enured.

Mahmoud El Menshawy
by Mahmoud El Menshawy , Accounting Supervisor - Consolidation & financial reporting , Orange Egypt

Since the product’s demand is elastic, associated by to the decrease in the product’s price… this scenario will lead to an increase in demand end with incease in revenue as well …. So correct answer is D. 

Divyesh Patel
by Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

Answer is D

ANGSHUMAN DAS
by ANGSHUMAN DAS , General Manager SCM & Ops , King Global Fz LLC

The Concept of Elastic demand means that the demand for the product is high , price is the only constrain for the increase in demand . Taking a perfect example for GOLD where there is always a demand for the Yellow metal  the only constrain is price . The only option to increase the Revenue is drop in price where there is elastic demand . 

 

With the decrease in price of GOLD  , offcourse this will lead to surge in demand and whenever there is surge in demand there has to be an increase in REVENUE .- so the answer is " D " 

 

Shafiulla Mohammad
by Shafiulla Mohammad , Customer Service Adviser , University of Bedfordshire

There will be an increase in total revenue. The answer is D

Abdullah Ba-khiadher
by Abdullah Ba-khiadher , chief accountant , Wesam Business Co ,LTD

Answer :d

SREEDEVI SUNILKUMAR
by SREEDEVI SUNILKUMAR , Business finance officer , Emirates Airline

An increase in total revenue.

Umer Aziz
by Umer Aziz , Senior Accountant , TERNA Bahrain Holding - GEK Group (www.terna.gr)

Option D is correct ..Since reduction in price will increase demand and ultimately increase revenue.

Mohammad Tohamy Hussein Hussein
by Mohammad Tohamy Hussein Hussein , Chief Executive Officer & ERP Architect , Egyptian Software Group

The answer id (d) An increase in total revenue.

FITAH MOHAMED
by FITAH MOHAMED , Financial Manager , FUEL AND ENERGY CO for transportion petroleum materials

Demand is inelastic if the relative change in the quantity required is less than the relative change in price and flexibility as a result  less than one 

 

This means that the decrease the price will lead to an increase in the quantity make revenue less than the  first total revenue

 

So the answer is  

a) A decrease in total revenue

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