Inelastic demand exists when
A)a small percentage increase in price produces a smaller percentage decrease in quantity demanded and total revenue falls.
B)a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.
C)an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.
D)the quantity demanded remains the same regardless of level of price and total revenue is unchanged.
E)a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.

Question

Quizplus · Accepted Answer

Inelastic demand means that a change in price has a relatively small impact on the quantity demanded. In this case, a small percentage increase in price produces a smaller percentage decrease in quantity demanded, which means that total revenue falls.

Inelastic Demand Exists When