Which of the following describes a situation in which demand must be inelastic?
A) Total revenue decreases by 10 percent when the price of spats rises by 10 percent.
B) Total revenue decreases by less than 10 percent when the price of spats rises by 10 percent.
C) Total revenue increases by more than 10 percent when the price of spats rises by 10 percent.
D) Total revenue decreases by $10 when the price of spats rises by $10.

Question

Quizplus · Accepted Answer

Demand is inelastic when the percentage change in quantity demanded is less than the percentage change in price, leading to an increase in total revenue when prices rise. Choice C indicates a situation where total revenue increases by more than the percentage increase in price, suggesting that the quantity demanded has not decreased enough to offset the price increase, which is characteristic of inelastic demand.

Which of the Following Describes a Situation in Which Demand