Asked by Chapman Deane on Jun 25, 2024
Verified
When demand is _____,a rise in price leads to a(n) _____ in total revenue.
A) perfectly inelastic;decrease
B) perfectly elastic;increase
C) inelastic;increase
D) elastic;increase
Perfectly Inelastic
Refers to a scenario in which the amount demanded or supplied shows no reaction whatsoever to changes in price.
Total Revenue
The total amount of money earned by a business from the sale of its goods and services.
- Analyze the interdependence between the price elasticity of demand and total earnings.
- Understand the impact of price changes on total revenue depending on the elasticity of demand.
Verified Answer
ND
NIyati DesaiJun 29, 2024
Final Answer :
C
Explanation :
When demand is inelastic, a rise in price leads to an increase in total revenue because the percentage decrease in quantity demanded is less than the percentage increase in price, resulting in higher overall revenue.
Learning Objectives
- Analyze the interdependence between the price elasticity of demand and total earnings.
- Understand the impact of price changes on total revenue depending on the elasticity of demand.