If total revenue increases after a price increase, demand is _____

Economics Dec 13, 2020

If total revenue increases after a price increase, demand is _____.

a. Inelastic

b. Unit elastic

c. Perfectly elastic

d. Elastic

Expert Solution

The correct option is a. Inelastic

Explanation:

Price elasticity explains the change in consumer's preferences due to fluctuation in market price. Suppose the increased price still helps to increase the total revenue. In that case, it is the situation when people have relatively inelastic demand due to which increased price will give more revenue with the same level of output sold.

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