An increase in demand will increase total revenue:
A)Always.
B)Only if supply is relatively inelastic.
C)Only if supply is relatively elastic.
D)Only if supply is unit elastic.

Question

An increase in demand will increase total revenue:
A)​Always.
B)​Only if supply is relatively inelastic.
C)​Only if supply is relatively elastic.
D)​Only if supply is unit elastic.

Quizplus · Accepted Answer

An increase in demand leads to higher prices and/or quantities sold, which generally increases total revenue regardless of the elasticity of supply. Elasticity of supply affects how much quantity can adjust to the change in demand, but the overall effect of increased demand is to increase total revenue.

An Increase in Demand Will Increase Total Revenue