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- Subject
- Supply and Demandeconomics-mcqs › supply-and-demand
- Published
- 29 May 2019
- Last updated
- 28 May 2026
What happens to total revenue when the demand for a product is price inelastic and the price is raised?
Multiple choice question for Supply and Demand. Select an option, then review the explanation below.
Explanation
When demand is price inelastic, consumers are less sensitive to price changes. Therefore, increasing the price causes total revenue to rise because the percentage drop in quantity demanded is smaller than the percentage increase in price.
More Supply and Demand MCQs
Practice related questions from the same subject.
- 1.What is the typical shape of a demand curve?
- 2.What term describes a company earning profits beyond its normal profit level?
- 3.How does an increase in marginal cost affect output, and how does an increase in marginal revenue impact output?
- 4.Marginal revenue refers to the ________ resulting from producing an additional ________ of output.
- 5.What are firms generally assumed to do with their costs and profits?