Total revenue increases if the price of the good
A) rises and demand is elastic.
B) rises and demand is inelastic.
C) rises and demand is unit elastic.
D) falls and supply is inelastic.
E) falls and demand is unit elastic.

Question

Quizplus · Accepted Answer

When the demand for a good is inelastic, a rise in price leads to a greater increase in total revenue than the decrease caused by the fall in quantity demanded. Therefore, total revenue increases when the price of the good rises and demand is inelastic.

Total Revenue Increases If the Price of the Good