Suppose a firm can not figure out whether the demand for the good it sells is elastic or inelastic but discovers that every time it raises its price, its total revenue declines. Their
A)demand is unit elastic.
B)demand is inelastic.
C)demand is elastic.
D)demand is perfectly inelastic.

Question

Quizplus · Accepted Answer

If total revenue declines every time the firm raises its price, it means that the demand for the good is sensitive to price changes. This indicates that the demand is elastic, as a small change in price leads to a relatively larger change in quantity demanded, causing total revenue to decrease when prices increase.

Suppose a Firm Can Not Figure Out Whether the Demand