A local merchant raises the price of his good and finds that his total revenues increase.The demand for this good is
A) inelastic.
B) elastic.
C) relatively price sensitive.
D) perfectly elastic.
E) unitary elastic.

Question

Quizplus · Accepted Answer

If the merchant raised the price of his good and found that his total revenues increased, it means that the increase in price led to a proportionately smaller decrease in the quantity demanded. This suggests that the demand for the good is inelastic, meaning that consumers are not very responsive to changes in price.

A Local Merchant Raises the Price of His Good and Finds