Suppose that demand is everywhere price inelastic.In this case, a contraction in the quantity supplied at every price must cause:
A)total revenue to climb.
B)total revenue to fall.
C)total revenue to remain flexed as profits fall.
D)any of the above depending upon circumstance.
E)either answer a or c, depending upon circumstance.

Question

Quizplus · Accepted Answer

When demand is price inelastic, a decrease in quantity supplied (contraction) leads to a higher price that consumers are still willing to pay, thus increasing total revenue.

Suppose That Demand Is Everywhere Price Inelastic