You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1. In order to increase total revenues from that product, you should
A) increase the price of the software.
B) decrease the price of the software.
C) hold the price of the software constant.
D) increase the supply of the software.

Question

Quizplus · Accepted Answer

Since the price elasticity of demand for the software is less than 1, that means that an increase in price will result in a smaller decrease in demand than the increase in price. Therefore, increasing the price of the software will result in an increase in total revenues.

You Are the Sales Manager for a Software Company and Have