Answer (A) is correct . A decline in price accompanied by an increase in total revenue indicates that quantity demanded has increased by a greater percentage than the percentage price decrease. Hence, the price elasticity of demand is greater than 1.0. Demand is elastic when it is greater than 1.0.
Answer (B) is incorrect because The increase in revenue resulting from the price decrease does not indicate inelasticity.
Answer (C) is incorrect because Elasticity must be greater than 1.0 if the total revenue increases as the result of a price decrease.
Answer (D) is incorrect because Total revenues received by the firm decrease if the elasticity is less than 1.0.
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