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3 February, 05:50

Producers' total revenue will decrease if A. The price rises and demand is inelastic. B. income increases and the good is a normal good. C. the price rises and demand is elastic. D. income falls and the good is an inferior good.

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  1. 3 February, 08:13
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    The correct answer is letter "C": the price rises and demand is elastic.

    Explanation:

    Price elasticity of demand describes the relationship between changes in quantity demanded and prices. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price. If the result is equal to or greater than 1, the demand is elastic. This means in front of relatively small changes in price, major changes in quantity demanded will occur.

    Therefore, if a good or service increases in price being the product inelastic, the quantity demanded is likely to drop (demand law) implying the producers' revenue will be decreased.
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Home » Business » Producers' total revenue will decrease if A. The price rises and demand is inelastic. B. income increases and the good is a normal good. C. the price rises and demand is elastic. D. income falls and the good is an inferior good.
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