Which of the following statements is inconsistent with an elastic demand curve?

• A. A small decrease in price leads to a large increase in quantity demanded.
• B. Consumers are highly responsive to price changes.
• C. Total revenue decreases when price decreases.
• D. The demand curve is relatively flat.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of price elasticity of demand, which measures how much the quantity demanded of a good responds to a change in its price. If demand is elastic, consumers are very responsive to price changes.
2. Step 2: Recall that for an elastic demand curve, a small decrease in price leads to a proportionally larger increase in quantity demanded. This means total revenue (Price × Quantity) increases when price decreases.
3. Step 3: Analyze the statement 'Total revenue decreases when price decreases.' For an elastic demand curve, this statement is inconsistent because total revenue should increase, not decrease, when price falls.
4. Step 4: Note that an elastic demand curve is typically relatively flat, reflecting high responsiveness of quantity demanded to price changes.
5. Step 5: Conclude that the inconsistent statement with an elastic demand curve is the one about total revenue decreasing when price decreases, as it contradicts the fundamental property of elastic demand.