Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Total revenue increases
B
Total revenue decreases
C
Total revenue remains the same
D
Total revenue fluctuates wildly
Understanding the Answer
Let's break down why this is correct
Answer
When a product has inelastic demand, it means that people will keep buying it even if the price goes up. This is because there are few substitutes for the product or it is something that people really need. If the price of this product increases, total revenue will also increase because the drop in quantity sold will be smaller than the increase in price. For example, if a medicine that people rely on raises its price from $10 to $12, most people will still buy it, leading to more money made in total. So, inelastic demand helps businesses make more revenue when prices rise.
Detailed Explanation
When demand is inelastic, people buy about the same amount even if the price goes up. Other options are incorrect because Some might think that higher prices always mean less sales; This idea suggests that price changes don't affect sales.
Key Concepts
Inelastic demand
Topic
Understanding Elasticity and Revenue
Difficulty
easy level question
Cognitive Level
understand
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