The price-elasticity coefficients are 2.6, 0.5, 1.4, and 0.18 for four different demand schedules,D₁, D₂, D₃, and D₄, respectively. A 2-percent increase in price will result in an increase in total revenues in which of the following cases?
A)D₁ and D₃
B)D₁ and D₄
C)D₂ and D₄
D)D₁, D₂, and D₃

Question

Quizplus · Accepted Answer

For products with inelastic demand (price elasticity coefficient less than 1), an increase in price leads to an increase in total revenue. This applies to D₂ (0.5) and D₄ (0.18).

The Price-Elasticity Coefficients Are 2