Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?
A)The quantity demanded and total revenue remain the same.
B)The quantity demanded does not change but total revenue increases.
C)The quantity demanded and total revenue fall to zero.
D)The quantity demanded does not change but total revenue decreases.

Question

Quizplus · Accepted Answer

When the price elasticity of demand is 0, demand is perfectly inelastic, meaning quantity demanded does not change with price changes. Therefore, as price increases, total revenue increases because revenue is the product of price and quantity.

Consider a Demand Curve That Has a Constant Elasticity Value