When the demand curve is inelastic, total revenues go down in proportion to a price increase.

Question

Quizplus · Accepted Answer

When the demand curve is inelastic, total revenues actually increase in proportion to a price increase. This is because consumers are willing to pay more for the product despite the price increase, and so the increase in revenue from the higher price outweighs the decrease in revenue from the decrease in quantity demanded.

When the Demand Curve Is Inelastic, Total Revenues Go Down