When a firm raises the price of its product,what happens to its total revenue?
A) If demand is elastic, total revenue decreases.
B) If demand is unit elastic, total revenue increases.
C) If demand is inelastic, total revenue decreases.
D) If demand is elastic, total revenue increases.
E) If demand is unit elastic, total revenue decreases.

Question

Quizplus · Accepted Answer

If demand is elastic, consumers will be sensitive to price changes, and increasing the price will lead to a decrease in the quantity demanded. This decrease in quantity demanded will more than offset the increase in price, resulting in a decrease in total revenue.

When a Firm Raises the Price of Its Product,what Happens