When a firm produces a good or service that has an elastic demand it will:
A) be less able to increase price without losing customers
B) be more able to increase price without losing customers
C) decrease sales and revenue by lowering price
D) be able to change price without any effect on sales and revenue
E) increase the quantity demanded by increasing the price

Question

Quizplus · Accepted Answer

When demand is elastic, consumers are more sensitive to price changes, meaning if the price increases, the firm is likely to lose customers as they will switch to substitutes or forgo the purchase altogether.

When a Firm Produces a Good or Service That Has