When demand is inelastic,
A)quantity sold does not increase when price decreases.
B)selling one more unit of output causes marginal revenue to increase.
C)selling one more unit of output cause total revenue to increase.
D)buyers are not very responsive to changes in the price of the product.
E)the percentage change in quantity demanded will exceed the percentage change in price (in absolute value).

Question

Quizplus · Accepted Answer

When demand is inelastic, buyers are not very responsive to changes in the price of the product. This means that a change in the price of the product will not greatly affect the quantity of the product demanded, resulting in a relatively stable demand curve. Therefore, quantity sold does not increase when price decreases, and there is no significant change in total revenue. Additionally, the percentage change in quantity demanded will be less than the percentage change in price (in absolute value), which is the opposite of choice E. Finally, selling one more unit of output may cause marginal revenue to increase, but this is not a defining characteristic of inelastic demand.

When Demand Is Inelastic