If a 12% increase in price leads to a 4% increase in the quantity demanded of...

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If a 12% increase in price leads to a 4% increase in the quantity demanded of...

If a 12% increase in price leads to a 4% increase in the quantity demanded of the good, as a result of the price change, the total revenue for this product will ____.

a) decrease

b) increase

c) not change

d) fall by half

business economics

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Answer 1

Answer #1

b) increase

Effect on total revenue depends on elasticity

Elasticity= 4/12= 0.33

Demand is inelastic.

Increase in price leads to increase in total revenue

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Answer 2

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