What would happen to total revenue of the firm if price increases in the inelastic region of the demand curve? Not enough information is provided Total revenue of the firm would stay the same Total revenue of the firm would decrease Total revenue of the firm would increase

Economics Dec 13, 2020

Expert Solution

The answer is D.

Price elasticity of demand is the degree to which the demand for something changes as its price changes.
Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price

If the demand is inelastic then an increase in price will result in a relatively smaller decrease in quantity demanded. So, total revenue will increase with an increase in price level.

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