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Match the concept/definition among the choices
Match the concept/definition among the choices.
Total revenue goes up when price falls
a. When prices fall, people choose to buy more.
b. Substitution
c. Persons will buy more at every price.
d. When demand elasticity is "elastic" or something like -1.7
e. A strategy for increasing profit
f. Customer loyalty programs
Expert Solution
The correct option is d. When demand elasticity is "elastic" or something like -1.7.
When demand is elastic, a percent change in price is lower than the corresponding percent change in demand. This means that the fall in revenue expected from the reduction in price is offset by the increase in revenue due to the increased demand. The net effect is positive and the total revenue rises.
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