Assume that the price elasticity of demand is -0.75 for a certain firm's product. If the firm lowers price, the firm's managers can expect total revenue to:
A) decrease.
B) increase.
C) remain constant.
D) either increase or remain constant, depending upon the size of the price decrease.

Question

Quizplus · Accepted Answer

Since the price elasticity of demand is inelastic (-0.75), lowering the price will lead to a proportionally smaller increase in quantity demanded, resulting in a decrease in total revenue.

Assume That the Price Elasticity of Demand Is -0