Suppose there is an increase in the cost of resources used in the production of good A.Then
A)if the price of A rises,the demand for A is elastic.
B)if the total revenue from sales of A increases,the demand for A is elastic.
C)if the total revenue from sales of A decreases,the demand for A is elastic.
D)total revenue increases because the price of A rises.
E)total revenue decreases because the quantity bought and sold of A decreases.

Question

Quizplus · Accepted Answer

If the cost of resources used in the production of a good increases, the price of that good may also increase. If the demand for that good is elastic, as the price increases, the quantity demanded will decrease proportionally more. This will lead to a decrease in total revenue from sales of that good, indicating that the demand for that good is elastic. Therefore, option C is the best choice.

Suppose There Is an Increase in the Cost of Resources