Suppose that demand is inelastic within a certain price range.For that price range,
A)an increase in price would increase total revenue because the decrease in quantity demanded is proportionately less than the increase in price.
B)an increase in price would decrease total revenue because the decrease in quantity demanded is proportionately greater than the increase in price.
C)a decrease in price would increase total revenue because the increase in quantity demanded is proportionately smaller than the decrease in price.
D)a decrease in price would not affect total revenue.

Question

Quizplus · Accepted Answer

When demand is inelastic, the percentage change in quantity demanded is less than the percentage change in price. Therefore, an increase in price leads to a smaller decrease in quantity demanded, which results in an increase in total revenue. Conversely, a decrease in price would result in a smaller increase in quantity demanded, leading to a decrease in total revenue. Therefore, option A is the correct choice.

Suppose That Demand Is Inelastic Within a Certain Price Range