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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.

Answer :

When demand is inelastic, a decrease in price will cause an increase in total revenue.

a drop in overall revenue. Demand will not vary in response to a change in the product's price if the price elasticity of demand is inelastic. The total income of the company will decrease if the price of the good decreases without the quantity demanded changing. If the price of an inelastic good is decreased, the demand for that good does not rise, resulting in less overall revenue due to the lower price and unchanged demand. This would suggest that the company shouldn't lower the price of its items because doing so wouldn't have any positive effects.

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