Question

Is the law of demand violated when price increases and total revenue increases also?

Answer 1

The law of demand states that everything remaining constant, the quantity demanded for a good will go down with an increase in the price and the quantity demanded for a good will go up with a fall in the price. The law of demand is not violated when price increases and total revenue also increases. This happens in case of inelastic demand. If the demand is inelastic, the % fall in demand is lower than the % rise in price. In such a case, the total revenue increases when the price is increased. The law of demand is not getting violated as quantity demanded still falls with the rise in price. Revenue increases because the % fall in quantity is lower than % increase in price.