13 Which of the following is not possible nswered Select one

13 Which of the following is not possible? nswered Select one out of 1.00 Se a. Demand is perfectly inelastic, and an increase in price causes an increase in revenue. question b. Demand is inelastic, and an increase in price causes an increase in revenue o C. Demand is unit elastic, and a decrease in price causes an increase in revenue d. Demand is elastic, and a decrease in price causes an increase in revenue Previous page Next page 6/10/2018

Solution

Answer is C. demand is unit elastic, a decrease in price cause increase in revenue.

Explanation:

Let original price be 100 and original demand be 200 Total revenue is $ 20000

Now, price decreases by 20% i.e. New price is 80 and demand increases by 20% i.e. new demand is 240.

The new revenue = 240 *80 = 19200. Hence there will not be an increase in total revenue.