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The following are characteristics related to a good with a highly inelastic demand except: A. own...

Question:

The following are characteristics related to a good with a highly inelastic demand except:

A. own price elasticity of demand, in absolute terms, is less than one.

B. the consumer has little sensitivity to any change in price for that good.

C. the percent change in quantity is smaller than the corresponding percent change in price.

D. if price increases, total revenue will decline.

The Price Elasticity of Demand:

The price elasticity of demand is a constant that tells us how responsive the quantity demanded is to a change in the price when all the other factors influencing the demand are held constant.

Answer and Explanation: 1


  • The correct option is: D. if price increases, total revenue will decline.

When the demand is inelastic, the total revenue changes in the same direction as the change in price. That is, an increase in price causes an increase in the total revenue, and a decrease in price decreases the total revenue.


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Price Elasticity of Demand in Microeconomics

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Chapter 2 / Lesson 11
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In microeconomics, the principle of price elasticity of demand is important to understand. Learn the definition of price elasticity of demand, understand the formula and its categories, and see some calculation examples.


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