Question on: WAEC Economics - 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
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Correct Option: A
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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