Question

Product cost sets the lower limits of the price, the utility provided by the product and the intensity of demand of the buyers sets the upper limit. So, in case of inelastic demand, total revenue ______ when price increases.

Options

• Rises

• Falls

• Constant

• Both (1) and (2)

Answer 1

Product cost sets the lower limits of the price, the utility provided by the product and the intensity of demand of the buyers sets the upper limit. So, in case of inelastic demand, total revenue rises when price increases.