A fall in the price of a normal commodity which has elastic demand will result in

Step 1: Analyze the question The question asks what happens when the price of a normal good falls, given that its demand is elastic (price elasticity of demand, PED, greater than 1).

Step 2: Key concepts

• Change in price causes a change in quantity demanded (a movement along the demand curve). It does not cause a change in "demand", which refers to a shift of the whole curve.
• For a normal good, a price fall leads to an increase in quantity demanded (law of demand).
• Total revenue (TR) = Price × Quantity.
• When demand is elastic (PED > 1), the percentage rise in quantity demanded is greater than the percentage fall in price.

Step 3: Work through it with an example Suppose PED = 2, and price falls from ₦100 to ₦90 (a 10% fall).

• Quantity demanded rises by 2 × 10% = 20%, say from 100 units to 120 units.
• Old revenue = 100 × 100 = ₦10,000
• New revenue = 90 × 120 = ₦10,800

Revenue has increased.

Step 4: Check each option

• A. A fall in demand: Wrong. A price change does not shift demand.
• B. A fall in quantity demanded: Wrong. Quantity demanded rises when price falls.
• C. An increase in revenue: Correct. Quantity rises proportionally more than price falls.
• D. A decrease in revenue: Wrong. This would happen if demand were inelastic.

Answer: C

Exam tip: Remember the rule "Elastic: price and revenue move in opposite directions."

• Elastic demand: price ↓ → revenue ↑ (price ↑ → revenue ↓)
• Inelastic demand: price ↓ → revenue ↓ (price ↑ → revenue ↑)

Also watch the wording: "demand" changes only because of non-price factors, while "quantity demanded" changes because of price. WASSCE examiners love testing this difference.