What effect will an increase in price have on the total revenue of a firm whose product has inelastic demand? total revenue will
Answer Details
If a product has inelastic demand, it means that consumers will continue to buy the product even if its price increases. Therefore, an increase in price will lead to an increase in total revenue for the firm. This is because the increase in price will offset the decrease in the quantity demanded, resulting in a net gain in revenue. In other words, the increase in price will more than compensate for the decrease in quantity demanded, resulting in a higher total revenue for the firm. Therefore, the answer is that total revenue will increase when the price of a product with inelastic demand increases.