A seller wants to increase its total revenue and decides to increase its price to do so. This seller thinks that the demand for its good is:
A) perfectly elastic.
B) unit elastic.
C) elastic.
D) inelastic.

Question

Quizplus · Accepted Answer

If a seller believes that increasing the price of a good will increase total revenue, they are assuming that the demand for the good is inelastic. This means that the percentage decrease in quantity demanded is less than the percentage increase in price, leading to an increase in total revenue.

A Seller Wants to Increase Its Total Revenue and Decides