If demand is price inelastic,
A)price and total revenue change in opposite directions
B)a seller should decrease the price to increase total revenue
C)too few goods are being produced from society's point of view
D)price and total revenue change in the same direction
E)the market can never be in equilibrium

Question

Quizplus · Accepted Answer

When demand is price inelastic, price and total revenue change in the same direction. This means that as the price increases, total revenue also increases, and as the price decreases, total revenue also decreases. Therefore, it is not advisable for a seller to decrease the price to increase total revenue, as this would only lead to a decrease in revenue. It also does not imply that too few goods are being produced from society's perspective or that the market cannot be in equilibrium.

If Demand Is Price Inelastic