If a business decreased the price of its product from $10 to $9 when demand was price inelastic,then total revenues would:
A) decrease.
B) increase.
C) remain unchanged.
D) be perfectly inelastic.

Question

Quizplus · Accepted Answer

When demand is price inelastic, a decrease in price leads to a proportionately smaller increase in quantity demanded. Therefore, the decrease in price from $10 to $9 would not lead to a significant increase in total revenue, and may even cause total revenue to decrease.

If a Business Decreased the Price of Its Product from $10