Total revenue increases if the price of the good A) falls and supply is inelastic. B) rises and demand is elastic. C) rises and demand is inelastic. D) rises and demand is unit elastic.

Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter5: Price Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 2SQ
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Total revenue increases if the price of the good
A) falls and supply is inelastic.
B) rises and demand is elastic.
C) rises and demand is inelastic.
D) rises and demand is unit elastic.
Transcribed Image Text:Total revenue increases if the price of the good A) falls and supply is inelastic. B) rises and demand is elastic. C) rises and demand is inelastic. D) rises and demand is unit elastic.
Expert Solution
Step 1

Option A

When supply is inelastic any % increase in price will be less than % change in quantity supplied, so total revenue will decrease. Incorrect.

 

Option B

When demand is elastic and any % increase in price will be less than % change in quantity demanded, so total revenue will decrease. Incorrect.

 

 

 

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