AP Microeconomics

Answer - A - If the demand for a particular good is price inelastic, then an increase in the good’s price will lead to an increase in total revenue.

Key Takeaway: A change in price-whether an increase or decreases-always affects how much money producers receive for their good and the quantity of the good that is demanded by consumers. How much the demand is affected ultimately depends upon how much the price of the good changes and how much that affects consumers. In general, if the demand for a particular good is price elastic, an increase in the good’s price will lead to a decrease in revenue; if the demand for a particular good is price inelastic, then an increase in the good’s price will lead to an increase in total revenue.