What is the effect of a 10 percent price increase on total revenue if elasticity is zero?
A)Revenue increases by 10 percent.
B)Revenue increases by less than 10 percent.
C)Revenue does not change.
D)Revenue decreases.
E)Revenue drops to 0.

Question

Quizplus · Accepted Answer

When elasticity is zero, it means that the quantity demanded does not change at all in response to a price change. Therefore, a 10 percent price increase leads directly to a 10 percent increase in total revenue, as the quantity sold remains constant.

What Is the Effect of a 10 Percent Price Increase