If demand is inelastic, an increase in the price of a good will cause total expenditures on the good to
A) fall.
B) remain constant since the decrease in quantity sold is exactly offset by the price increase.
C) rise.
D) rise if it is a normal good and fall if it is an inferior good.

Question

Quizplus · Accepted Answer

When demand is inelastic, the percentage change in quantity demanded is less than the percentage change in price, so total expenditures (price multiplied by quantity) increase when the price increases.

If Demand Is Inelastic, an Increase in the Price of a Good