Asked by Alison Vidas on Apr 28, 2024
Verified
If the demand for donuts is inelastic, then an increase in the price of donuts will
A) increase total revenue of donuts sellers.
B) decrease total revenue of donuts sellers.
C) not change total revenue of donuts sellers.
D) change total revenue of donuts sellers but in an unknown way without more information.
Inelastic Demand
A situation where the demand for a product does not significantly change with a change in the product's price.
Total Revenue
The gross income a corporation achieves by trading products or delivering services across a certain span of time.
- Evaluate the relationship between price adjustments and demanded quantity through the lens of elasticity.
- Analyze the relationship between price elasticity and complete revenue.
Verified Answer
TJ
Tatyana JonesApr 30, 2024
Final Answer :
A
Explanation :
When demand is inelastic, it means that the quantity demanded does not decrease significantly as the price increases. Therefore, an increase in the price of donuts will lead to an increase in total revenue for donut sellers because the decrease in quantity demanded is proportionally less than the increase in price.
Learning Objectives
- Evaluate the relationship between price adjustments and demanded quantity through the lens of elasticity.
- Analyze the relationship between price elasticity and complete revenue.