APFIVE Elastic Demand and Total Revenue
If a country removes trade barriers on automobiles, leading to increased purchases of foreign cars, what is the likely impact on the total revenue of domestic automobile producers, assuming the demand for their product is elastic?
A
Total revenue will remain unchanged as higher sales volume compensates for lower prices.
B
Total revenue will increase slightly due to a higher price per car sold.
C
Total revenue will decrease significantly due to a large drop in quantity sold.
D
Total revenue will decrease slightly due to a small reduction in quantity sold.
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