If a Store Sells a Good That Has Inelastic Demand

question 106

Multiple Choice

If a store sells a good that has inelastic demand, what would be the net result on its total revenue from an increase in price of that good?

• A) There would be an increase in total revenue.
• B) There would be no change in total revenue.
• C) There would be a decrease in total revenue.
• D) There would be an initial increase, followed by a decrease, in total revenue.

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Definitions:

Allocated

The process of distributing resources or costs among various accounts or departments based on a specific criteria or formula.

Indirect Expenses

Costs that are not directly linked to a specific product or service but are necessary for the general operation of a business, such as administration and marketing expenses.

General Benefit

A type of advantage or positive outcome that applies broadly, often in a nonspecific or nonexclusive manner.

Department Manager

An individual responsible for overseeing the operations, staff, and budget of a specific department within an organization.