Suppose that an Italian ice cream firm is facing a linear demand curve and that the current price for the Italian ice cream is set at a point where the price elasticity is 0.7. If the firm decreases the product price
A) the demand becomes more inelastic and total revenue increases.
B) the demand becomes more inelastic and total revenue decreases.
C) the demand becomes less inelastic and total revenue increases.
D) the demand becomes less inelastic and total revenue decreases.

Question

Quizplus · Accepted Answer

The Answer of Suppose that an Italian ice cream firm is facing a linear demand curve and that the current price for the Italian ice cream is set at a point where the price elasticity is 0.7. If the firm decreases the product price
A) the demand becomes more inelastic and total revenue increases.
B) the demand becomes more inelastic and total revenue decreases.
C) the demand becomes less inelastic and total revenue increases.
D) the demand becomes less inelastic and total revenue decreases.

Suppose That an Italian Ice Cream Firm Is Facing a Linear