Question

127. When demand is perfectly inelastic, an increase in price will result in:
a. A decrease in total revenue
b. An increase in total revenue
c. NO change in total revenue
d. A decrease in quantity demanded​

Answer 1

Answer:

When demand is perfectly inelastic, an increase in price will result in an increase in total revenue.

Explanation:

When the price elasticity of demand for an item is perfectly inelastic, price changes have no effect on the quantity desired; raising prices will always result in an increase in total income. Costs or capacities are fixed and unaffected by the other factor in perfectly inelastic demand. When the price is reduced, the quantity demanded increases to infinity, and when the price is increased, the quantity demanded declines to zero.

Thus, even if the drug's price were to skyrocket, the quantity requested would stay unchanged.