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What effect will an increase in price have on the total r...

What effect will an increase in price have on the total revenue of a firm whose product has inelastic demand? Total revenue will

A.

Increase

B.

Fall

C.

Fluctuate

D.

Remain unchanged

Correct answer is A

If prices for inelastic goods are increased, the total revenue increases, but it would lead to a small decrease in quantity demanded. This means that firms that deal in inelastic goods or services can increase prices, selling a little less but making higher revenues.