Question

If the demand for insulin is price inelastic, a 5 percent increase in the price of insulin will have no effect on the total revenue of insulin producers have no effect on the total revenue of insulin producers
A increase the total revenue of insulin producers increase the total revenue of insulin producers
B decrease the total revenue of insulin producers decrease the total revenue of insulin producers
C decrease the total spending on insulin by consumers decrease the total spending on insulin by consumers
D cause the demand for insulin to be less elastic cause the demand for insulin to be less elastic

Answer 1

Answer: A increase the total revenue of insulin producers

Explanation:

When the demand for a good or service is inelastic, it means that quantity demanded does not change with respect to price. In other words price can be increased on decreased and the quantity demanded would not change.

In this case, the price of insulin increased by 5%. Quantity demanded will not change for insulin which means that the producers will be making more revenue because the same number of people will still be buying, this time however, they would be buying at a higher price thus binging in higher revenue.