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:The correct answer is A) increase the total revenue of insulin producers.

If the demand for insulin is price inelastic, it means that consumers are relatively unresponsive to changes in the price of insulin. Therefore, a 5 percent increase in the price of insulin will not cause a significant decrease in the quantity demanded of insulin. As a result, the total revenue of insulin producers will increase since they can sell the same quantity of insulin at a higher price.

Explanation: If the demand for insulin were price elastic, a 5 percent increase in the price of insulin would cause a larger decrease in the quantity demanded of insulin. This would result in a decrease in the total revenue of insulin producers.

Option C is incorrect because a price increase is not likely to decrease the total spending on insulin by consumers, as insulin is a necessary medication for people with diabetes. Option D is incorrect because a change in price does not affect the elasticity of demand. Elasticity of demand is determined by other factors, such as the availability of substitutes for the product.

Answer 2

Answer: A increase the total revenue of insulin producers

Step-by-step 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.