If the demand schedule for bauxite is relatively inelastic to price changes, an increase in the supply schedule of bauxite will cause a
A) decrease in price and a decrease in sales revenue.
B) decrease in price and an increase in sales revenue.
C) increase in price and a decrease in sales revenue.
D) increase in price and an increase in sales revenue.

Question

Quizplus · Accepted Answer

When demand is inelastic, an increase in supply leads to a decrease in price, but the total revenue decreases because the percentage change in quantity demanded is less than the percentage change in price.

If the Demand Schedule for Bauxite Is Relatively Inelastic to Price