If the demand for donuts is elastic,then an increase in the price of donuts will
A) increase total revenue of donut sellers.
B) decrease total revenue of donut sellers.
C) not change total revenue of donut sellers.
D) There is not enough information to answer this question.

Question

Quizplus · Accepted Answer

If the demand for donuts is elastic, then an increase in the price of donuts will lead to a more than proportionate decrease in the quantity demanded. As a result, total revenue (price x quantity) of donut sellers will decrease, indicating an inverse relationship between price and revenue. Therefore, the best choice is B, which states that an increase in the price of donuts will decrease total revenue of donut sellers.

If the Demand for Donuts Is Elastic,then an Increase in the Price