Assume a product has an inelastic demand curve. If the producer of the good raises the price of the product, that producer's total revenue will decrease.

Question

Quizplus · Accepted Answer

If a product has an inelastic demand curve, the change in price will have a relatively small effect on the quantity demanded. Therefore, when the producer raises the price, the total revenue may actually increase as the increase in price outweighs the decrease in quantity demanded.

Assume a Product Has an Inelastic Demand Curve