Elasticity and Expenditure or Revenue: Answers

Question:

In a scenario of "Housing War", the price of a luxury houses falls 25%.
Does luxury house real estates' total revenue rise or fall?

Solution:

Expenditure = P × Q
The fall in P will reduce revenue, however Q rises, which raises revenue.
It is known that in this case demand is elastic, Q will increase more than 25%, so revenue rises.

For more details, please contact me here.