Eco -- Price cut most likely reduce total revenue.

[hopetobeat]

Inelastic demand, right?

How about income elasity of inferior goods.

 

[Daniela]

Yeap, Inelastic demand.

 

[thunderanalyst]

yes, your q remains same but price drops ==> revenues decrease.

I hope this is correct

 

[rlange]

I had to stop and think about the same question. I came back at the end of taking the exam since I had quite a bit of time left and created a little example with numbers so I could "prove" to myself that Inelastic would be correct. Guess it was just me being worried about getting an easy question wrong.