In cases of elastic demand, what relationship is observed between price and total revenue?

In cases of elastic demand, a decrease in price leads to an increase in total revenue, while an increase in price results in a decrease in total revenue. This relationship occurs because consumers are quite responsive to changes in price when demand is elastic.

When the price decreases, consumers are more likely to purchase larger quantities due to the lower price, thus increasing total revenue. Conversely, if the price rises, the quantity demanded tends to drop significantly, leading to a lower total revenue. This inverse relationship between price and total revenue is fundamental in understanding market dynamics and pricing strategies for products or services that exhibit elastic demand.