If a good is price inelastic, an increase in price will _____.
A) increase the ﬁrm's total revenue
B) cause a proportionate increase in costs
C) lead to a fall in the ﬁrm's proﬁts
D) cause the demand curve to become vertical

Question

Quizplus · Accepted Answer

When a good is price inelastic, it means that the quantity demanded does not significantly change with a change in price. Therefore, an increase in price will lead to an increase in the firm's total revenue because consumers continue to purchase nearly the same amount despite the higher price.

If a Good Is Price Inelastic, an Increase in Price