Total Revenue Rises with Price Increase in Inelastic Demand Steps: - Price elasticity of demand (PED) measures responsiveness of quantity demanded to price changes: |PED| < 1 is inelastic, |PED| > 1 is elastic, |PED| = 1 is unitary, |PED| = ∞ is perfectly elastic. - Total revenue (TR) = price (P) × quantity (Q); a price increase raises TR if the % drop in Q is less than the % rise in P. - For inelastic demand (|PED| < 1), Q falls proportionally less than P rises, so TR increases. - Thus, relatively inelastic demand fits this condition. Why C is correct: - In relatively inelastic demand (|PED| < 1), a price increase causes a smaller % decrease in Q than the % increase in P, so TR = P × Q rises (TR change formula: %ΔTR ≈ %ΔP × (1 + PED)). Why the others are wrong: - A: Perfectly elastic demand means Q drops to zero with any price increase, so TR falls to zero. - B: Relatively elastic demand (|PED| > 1) means Q drops more …