If the demand for coffee is price inelastic, an increase in the supply of coffee leads to falling prices and rising sales revenues.

Name: If the demand for coffee is price inelastic, an increase in the supply of coffee leads to falling prices and rising sales revenues.
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Question

Quizplus · Accepted Answer

When demand is price inelastic, an increase in supply will lead to lower prices, but the total revenue from sales will decrease because the percentage drop in price will be greater than the percentage increase in quantity demanded.

If the Demand for Coffee Is Price Inelastic, an Increase