If the price of a product with inelastic demand is increased, the _____ in revenue from selling fewer units.
A) gain in revenue from the higher price is greater than the loss
B) gain in revenue from the higher price is greater than the gain
C) loss in revenue from the higher price is smaller than the loss
D) gain in revenue from the higher price is smaller than the loss

Question

Quizplus · Accepted Answer

For products with inelastic demand, when prices increase, the percentage decrease in quantity demanded is less than the percentage increase in price. This means that the total revenue (price x quantity sold) increases because the gain in revenue from the higher price per unit outweighs the loss in revenue from selling fewer units.

If the Price of a Product with Inelastic Demand Is