With perfectly inelastic demand, a rise in price leaves quantity demanded unchanged, so total revenue:

With perfectly inelastic demand, a rise in price leaves quantity demanded unchanged, so total revenue:

• A. falls
• B. rises
• C. is unchanged
• D. cannot be determined

Answer: (B)

With perfectly inelastic demand, quantity demanded does not change when the price changes. Total revenue is price multiplied by quantity, and if the quantity is fixed, raising the price increases revenue. For example, selling 100 units at a higher price raises total revenue (from P×100 to a larger P×100). Therefore, total revenue rises. It’s not unchanged or cannot be determined because the fixed quantity means any price increase directly boosts revenue.

With perfectly inelastic demand, quantity demanded does not change when the price changes. Total revenue is price multiplied by quantity, and if the quantity is fixed, raising the price increases revenue. For example, selling 100 units at a higher price raises total revenue (from P×100 to a larger P×100). Therefore, total revenue rises. It’s not unchanged or cannot be determined because the fixed quantity means any price increase directly boosts revenue.