The Yearous Group saw an increase in total revenue when the company decreased the price of its golf bags. The marketing manager can assume that the demand is
A. unitarily elastic
B. elastic
C. inelastic
D. All of the above
E. None of the above
Answer: (B) is the correct answer, the demand is elastic. When a firm or organization reduces their price and total revenues increase (or stretch), the demand is said to be elastic. (A) is incorrect. In order for the demand to be unitarily elastic, the revenue would have to stay the same. Inelasticity would occur if the total revenue decreased in conjunction with a decrease in price (C). (D) and (E) are both incorrect. You cannot have elasticity and inelasticity at the same time, and in the example, revenue of the Yearous Group showed an increase, while the price was dropped.