If the demand for a product is price inelastic: an increase in price will increase total...
If the demand for a product is price inelastic: an increase in price will increase total revenue. the price elasticity coefficient will be greater than one. an increase in price will decrease total revenue. a decrease in price will result in a decrease in demand.
Homework Answers
Ans: an increase in price will increase total revenue.
Explanation:
When demand is inelastic, it means a % change in price leads to a less than % change in quantity demanded. In other word, quantity demanded is unresponsive to price change. So, when demand for a product is price inelastic, an increase in price will increase total revenue. Thus, option 1 is correct.
If the demand for a product is price inelastic, the price elasticity coefficient will be less than one. Thus, option 2 is incorrect.
If the demand for a product is price inelastic, an increase in price will increase total revenue. Thus, option 3 is incorrect.
If the demand for a product is price inelastic,a decrease in price will not result in a decrease in demand. Thus, option 4 is incorrect.
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