An increase in demand will:
A)reduce total revenue.
B)increase total revenue.
C)increase total revenue only if supply is inelastic.
D)increase total revenue only if supply is elastic.

Question

An increase in demand will:
A)​reduce total revenue.
B)​increase total revenue.
C)​increase total revenue only if supply is inelastic.
D)​increase total revenue only if supply is elastic.

Quizplus · Accepted Answer

An increase in demand leads to an increase in quantity demanded at each price. This causes the equilibrium price to increase, leading to an increase in total revenue. Therefore, an increase in demand will increase total revenue.

An Increase in Demand Will