A gas station owner in a large city learned in his microeconomics class that buyers are relatively unresponsive to changes in the price of gasoline. If that assumption is correct, when he increases the price of gas at his station
A) total revenue will increase.
B) total revenue will decrease.
C) total revenue will not change.
D) the sale of complementary goods at his station will increase.

Question

Quizplus · Accepted Answer

When buyers are relatively unresponsive to changes in the price of gasoline, it means the demand for gasoline is inelastic. In such cases, an increase in price leads to a less than proportionate decrease in quantity demanded, resulting in an increase in total revenue.

A Gas Station Owner in a Large City Learned in His