What effect will an increase in price have on the total revenue of a firm...
ECONOMICS
WAEC 2016
What effect will an increase in price have on the total revenue of a firm whose product has inelastic demand? total revenue will
- A. increase
- B. fall
- C. fluctuate
- D. remain unchanged
Correct Answer: A. increase
Explanation
if prices for inelastic goods are increased, the total revenue increases, but it would lead to a small decrease in quantity demanded. This means that firms that deal in inelastic goods or services can increase prices, selling a little less but making higher revenues.
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