Which of the following describes a situation in which demand must be inelastic?
A) The price of pens rises by 10 cents, and quantity of pens demanded falls by 50.
B) The price of pens rises by 10 cents, and total revenue rises.
C) A 20 percent increase in the price of pens leads to a 20 percent decrease in the quantity of pens demanded.
D) Total revenue does not change when the price of pens rises.
E) Total revenue decreases when the price of pens rises.

Question

Quizplus · Accepted Answer

When the price of a good rises and total revenue also rises, it indicates that demand is inelastic. This is because the percentage change in quantity demanded is less than the percentage change in price, leading to an increase in total revenue.

Which of the Following Describes a Situation in Which Demand