Other things equal, if a firm finds the demand for one of its products is inelastic, it can increase its total revenues by _____.
A)raising its price
B)lowering its price
C)reducing fixed costs
D)raising its variable costs

Question

Quizplus · Accepted Answer

A product with inelastic demand means that slight increases or decreases in price will not significantly affect the demand, or units sold, for the product.Under this condition, increasing the price will result in approximately the same number of products being sold at a higher price, thus increasing total revenue; that is, TR = P F1F1F1S1F1F1F10 Q.

Other Things Equal, If a Firm Finds the Demand for One