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Agriculture Economics QUESTION #11891
Question 1
When demand is price inelastic, i.e. $|E_d| < 1$, a decrease in price will cause total revenue to:
  • Increase
  • Decrease✔️
  • Stay exactly the same
  • Become negative
Correct Answer Explanation
With inelastic demand, quantity responds proportionally less than price, so a price cut reduces total revenue.