Final answer:
An increase in total revenue following a decrease in supply is more likely if the elasticity of demand is less than 1, meaning that demand is inelastic and consumers are not very responsive to price changes.
Step-by-step explanation:
A decrease in supply, which is represented by a shift to the left on a supply and demand graph, generally causes prices to rise and quantity supplied to fall due to the scarcity of the product. Whether this results in an increase in total revenue depends on the elasticity of demand.
If the elasticity of demand is less than 1 (inelastic), consumers are not very sensitive to price changes. Therefore, even with a price increase, the decrease in quantity demanded will not be proportionally as large, potentially leading to an increase in total revenue. On the other hand, if demand is elastic (elasticity greater than 1), consumers are very sensitive to price changes. Therefore, a decrease in supply that raises prices will likely lead to a significant reduction in the quantity demanded, potentially decreasing total revenue. If demand elasticity is exactly 1 (unit elastic), any price change will not affect the total revenue — it will remain the same.
Therefore, the option that states a decrease in supply will increase total revenue in that market if the elasticity of demand is less than 1 (Option B) is correct.