If the demand for cigarettes is inelastic,
A)Total revenue will rise if the price of cigarettes rises.
B)No matter how high the price goes,the quantity demanded will not fall.
C)Total revenue will fall if the price of cigarettes rises.
D)A price reduction will actually cause the quantity demanded to fall.

Question

Quizplus · Accepted Answer

Inelastic demand means that a change in price will result in a proportionately smaller change in quantity demanded. Therefore, if the price of cigarettes rises, the quantity demanded will not fall significantly, and the total revenue generated by the sale of cigarettes will increase. The opposite would be true if demand were elastic, where a price increase could result in a significant decrease in the quantity demanded, causing total revenue to fall.

If the Demand for Cigarettes Is Inelastic