Suppose That Demand Is Inelastic Within a Certain Price Range

question 170

Multiple Choice

Suppose that demand is inelastic within a certain price range.For that price range,

• A)an increase in price would increase total revenue because the decrease in quantity demanded is proportionately less than the increase in price.
• B)an increase in price would decrease total revenue because the decrease in quantity demanded is proportionately greater than the increase in price.
• C)a decrease in price would increase total revenue because the increase in quantity demanded is proportionately smaller than the decrease in price.
• D)a decrease in price would not affect total revenue.

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Definitions:

Perfectly Vertical

Describes a line or curve on a graph that has an infinite slope, representing a situation where a given variable is unaffected by changes in other variables.

New Substitutes

Refers to newly available goods or services that can replace or compete with existing ones, affecting demand and market dynamics.

Narrowly Defined

Described or specified with a high degree of precision and detail, often used to limit the scope or focus of a concept or category.

Available Substitutes

Alternatives to a product or service that are readily accessible to consumers, affecting demand and pricing strategies.