Suppose that the demand for men's ties is price inelastic for the range of prices between $10 and $12. If Joe raises the price of the ties in his shop from $10 to $12, what will happen to Joe's total revenues?
A) Total revenues will decrease.
B) Total revenues will increase.
C) Total revenues will not change.
D) Total revenues will have no relationship to the quantity of ties demanded.

Question

Quizplus · Accepted Answer

Since the demand is price inelastic, increasing the price will not result in a significant decrease in demand. Therefore, as the price increases, the total revenue will also increase.

Suppose That the Demand for Men's Ties Is Price Inelastic