When Demand Is Inelastic, a Decrease in Price Will Cause

question 38

Multiple Choice

When demand is inelastic, a decrease in price will cause:

• A)an increase in total revenue
• B)a decrease in total revenue
• C)no change in total revenue
• D)there is insufficient information to answer this question

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Definitions:

Marginal Revenue

The extra revenue generated from the sale of an additional unit of a product or service.

Marginal Cost

Marginal cost is the cost of producing one additional unit of a good or service, crucial for decision-making processes in economics and business.

Average Total Cost

The total cost divided by the number of goods produced, representing the per-unit cost of production.

Profit-Maximizing Monopoly

A market condition where a single seller dominates, aiming to achieve the highest possible profit by controlling prices and output.