Multiple choice

The requirement is to apply the concept of price-elasticity of demand. If demand is inelastic an increase in price will increase total revenue. As a business owner if one has determined that the demand for his product is inelastic. Based upon this assessment it is understood that _________.

  1. increasing the price of the product will increase total revenue

  2. decreasing the price of the product will increase total revenue

  3. increasing the price of the product will have no effect on total revenue

  4. increasing the price of your product will increase competition

  5. none of these

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Correct, because it accurately states the rule that if demand is inelastic an increase in price will increase total revenue.