f the demands for goods is price elastic, an increase in its price will increase total revenue in that market.Question 2AnswerTrueFalse

Answer

The statement is False.

When the demand for a good is price elastic, it means that consumers are sensitive to price changes. Specifically, an increase in the price of a price-elastic good leads to a proportionally larger decrease in the quantity demanded. As a result, the overall total revenue (which is calculated as price multiplied by quantity sold) will decrease when the price increases.

To illustrate this with an example:

1. If a product originally costs $10 and sells 100 units (total revenue =$10 * 100 = $1000).
2. If the price increases to $12 and due to price elasticity, the quantity demanded falls to 80 units (total revenue =$12 * 80 = $960).

In this scenario, total revenue decreases from $1000 to$960 despite the price increase. Thus, for goods with elastic demand, an increase in price results in a decrease in total revenue.