When demand for a product is inelastic and prices are increased, usually demand will:
A)increase, and operating profits will increase
B)remain the same, and operating profits will increase
C)decrease, and operating profits will decrease
D)remain the same, and operating profits will decrease

Question

Quizplus · Accepted Answer

When demand is inelastic, consumers are less sensitive to price changes, so the quantity demanded remains relatively stable even if prices increase. As a result, operating profits typically increase because the higher price compensates for any minor decrease in quantity sold.

When Demand for a Product Is Inelastic and Prices Are