Higher prices will increase total revenue if
A)Demand is elastic.
B)Demand is unitary elastic.
C)Demand is inelastic.

Question

Quizplus · Accepted Answer

If the demand is inelastic, then an increase in price will result in a proportionately smaller decrease in quantity demanded. Therefore, the increase in price will lead to an increase in total revenue. If demand is elastic, then an increase in price will result in a proportionately larger decrease in quantity demanded, leading to a decrease in total revenue. If demand is unitary elastic, then the increase in price will lead to no change in total revenue.

Higher Prices Will Increase Total Revenue If