What happens when demand is elastic?
a. As price goes up, revenue goes down.
b. As price goes down, revenue goes down.
c. As price goes up, revenue goes up.
d. As price goes up, revenue does not change.
ANSWER: a
Elastic demand is a situation in which consumer demand is sensitive to price changes. The demand is said to be elastic if: (1) price goes up and revenue goes down (2) price goes down and revenue goes up.
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