A decrease in supply (shift to the left) will increase total revenue in that market if ?
Correct answer: A. demand is price inelastic
- A. demand is price inelastic
- B. supply is price elastic
- C. supply is price inelastic
- D. demand is price elastic
Explanation
A fall in supply raises price, and total revenue rises when the percentage increase in price exceeds the percentage decrease in quantity sold. That occurs when demand is price inelastic.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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