If revenue from sales of a product increases as a result of an increase in price, then the price elasticity of demand for the product must be relatively inelastic.

Question

Quizplus · Accepted Answer

When the price elasticity of demand is inelastic, it means that the percentage change in quantity demanded is less than the percentage change in price. Therefore, if a price increase leads to higher total revenue, it indicates that the demand for the product is relatively inelastic, as consumers are not significantly reducing their quantity demanded in response to the price increase.

If Revenue from Sales of a Product Increases as a Result