If the demand for electricity is inelastic, then if the local utility wants to increase its total revenue, it should _______ its price.
A)lower
B)raise
C)not change
D)frequently change

Question

Quizplus · Accepted Answer

When the demand for electricity is inelastic, it means that consumers are not very responsive to changes in price. Therefore, if the local utility wants to increase its total revenue, it can raise its price without losing too many customers. Lowering the price may not necessarily lead to an increase in demand, so it is not the best choice. Not changing the price will keep revenue constant, but it will not lead to an increase. Frequently changing the price may lead to confusion and uncertainty for customers, which can negatively impact demand. Therefore, raising the price is the best choice to increase total revenue when demand is inelastic.

If the Demand for Electricity Is Inelastic, Then If the Local