Assume a product has an inelastic demand. If the producer of the good raises the price of the product, that producer's total revenue will decrease.

Question

Quizplus · Accepted Answer

If the demand for a product is inelastic, a price increase will lead to a proportionally smaller decrease in the quantity demanded. Therefore, the producer's total revenue may actually increase despite the higher price.

Assume a Product Has an Inelastic Demand