If the demand schedule for bauxite is relatively inelastic to price changes,an increase in the supply schedule of bauxite will cause a:
A) Decrease in price and a decrease in sales revenue
B) Decrease in price and an increase in sales revenue
C) Increase in price and a decrease in sales revenue
D) Increase in price and an increase in sales revenue

Question

Quizplus · Accepted Answer

When demand is relatively inelastic, an increase in supply will result in a decrease in price, but the overall increase in quantity demanded will not be significant enough to offset the decrease in price. This means that total sales revenue will decrease.

If the Demand Schedule for Bauxite Is Relatively Inelastic to Price