question archive If total revenue increases as a result of a price increase: A
If total revenue increases as a result of a price increase: A
Subject:EconomicsPrice:2.88 Bought3
If total revenue increases as a result of a price increase:
A. the good is price elastic.
B. the good is price inelastic.
C. the good is price unit elastic.
D. Any of these could be true.
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The correct option is B. the good is price inelastic.
Explanation: When a good is price inelastic, its quantity demand does not change along with the change in its prices. So, when it is given that price increase results in the increase of total revenue, this means that change in price did not affect the quantity demanded of the good, and consumers are still buying it at higher prices. Therefore, we can say that the good is price inelastic.
