Which of the following is most likely to occur when price is inelastic?
A)A price decrease increases unit margin.
B)A price decrease increases gross profit.
C)A price increase reduces gross profit.
D)A price decrease hurts sales.
E)A price decrease reduces unit volume.

Question

Quizplus · Accepted Answer

When price is inelastic, a price decrease is unlikely to result in a significant increase in sales, as consumers are not highly responsive to changes in price. Therefore, a price decrease could potentially hurt sales, as the decrease in price will not be enough to offset the decrease in revenue from lower unit sales.

Which of the Following Is Most Likely to Occur When