If total revenue increases when price increases:
A) demand is elastic.
B) demand is inelastic.
C) demand is unit elastic.
D) Any of these could be true.

Question

Quizplus · Accepted Answer

If total revenue increases when price increases, demand is inelastic. This means that consumers are not very responsive to changes in price, and so when the price is raised, total revenue still increases. If demand were elastic, an increase in price would lead to a decrease in total revenue. If demand were unit elastic, then the increase in price would lead to no change in total revenue.

If Total Revenue Increases When Price Increases