If the total revenue received by a firm decreases when it raises its price, this indicates that the demand for the firm's product is:
A) unstable.
B) price inelastic.
C) price elastic.
D) unit price elastic.

Question

Quizplus · Accepted Answer

When the total revenue received by a firm decreases when it raises its price, this indicates that the demand for the firm's product is price elastic. This means that consumers are sensitive to price changes, and as the price increases, the quantity demanded decreases enough to offset the price increase, resulting in a decrease in total revenue.

If the Total Revenue Received by a Firm Decreases When