If the demand for insulin is inelastic,an increase in insulin prices leads to
A) less total revenue for insulin makers.
B) more total revenue for insulin makers.
C) no change in total revenue for insulin makers.
D) first a decrease, then an increase in total revenue for insulin makers.
E) Total revenue probably changes, but we need more information about the change in total expenditures on insulin to determine if the total revenue rises, falls, or stays the same.

Question

Quizplus · Accepted Answer

When the demand for insulin is inelastic, a change in the price of insulin results in a proportionally smaller change in the quantity demanded. This means that when insulin prices are increased, the increase in revenue from the higher price outweighs the decrease in revenue from the lower quantity demanded, resulting in overall higher total revenue for insulin makers.

If the Demand for Insulin Is Inelastic,an Increase in Insulin