Question

If the price elasticity of demand for a good is elastic, then if a firm wants...

If the price elasticity of demand for a good is elastic, then if a firm wants to increase their total revenues from selling that good, it should

increase the price of the good.

decrease the price of the good.
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Homework Answers

Answer #1

Elastic demand is the type of demand in which even there is a small change in the price can causes heavy change in the quantity demanded

if the demand is elastic in nature then the value of price elasticity of demand is greater than 1

For elastic demand the total revenue and price moves in opposite direction

If total revenue increases then price will decrease and vice versa

So in order to to increase the total revenue there is need to decrease in the price

If the demand is inelastic then price and revenue moves in same directions

So the answer is option B

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