anonymous
  • anonymous
If the demand for electricity is perfectly inelastic, an increase in the price of electric power will cause quantity demanded to ___________ and total revenue will _________ for the power company. A.) increase, decrease B.) increase, not change C.) stay the same, increase D.) decrease, decrease E.) remain constant, decrease
Economics - Financial Markets
schrodinger
  • schrodinger
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anonymous
  • anonymous
well, inelastic demand means that the demand for the product is not (negatively) affected by an increase in price (C or E). So, the power company is able to charge such high price that the demand for the electricity is completely satisfied. In this case, since price increased, total revenue must increase as well. Hence, correct answer is C.

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