An accountant increases the price he charges for his services by 16 percent. In response, the demand for his services decreases by 14 percent. Will the accountant's revenue from his accounting services increase, decrease, or remain unchanged? The accountant's reve

Question

Kareem Booth

Business

3 February, 10:14

An accountant increases the price he charges for his services by 16 percent. In response, the demand for his services decreases by 14 percent. Will the accountant's revenue from his accounting services increase, decrease, or remain unchanged? The accountant's reve

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Answers (1)

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Ana Carney · Answer 1

The total revenue will increase.

Explanation:

An accountant increases the price the charges for his services by 16 percent.

The demand for his services decreases by 14 percent.

This shows that demand is inelastic. A proportionate change in the price of a product is causing a less than proportionate change in its quantity demanded.

So the total revenue will increase as demand is not declining as much as the increase in price.