Question

Suppose you are a partner in a business that sells wadgets. You have been selling wadgets for $20 each and sell 1,000 wadgets. Your partner suggests that you increase your price of wadgets by just a little bit. You do some research and find that wadgets have a price elasticity of demand of 0.69. Should you agree to raise your price if the only concern you have is total revenue? Why?

Answer 1

In this case initially the selling price of wadgets $20 each and at this price sell 1000 wadgets.
After the suggestion to raise the price of the commodity for the increase of the revenue the observation for the necessity of demand is 0.69 it means that demand is inelastic and the inelastic demand is that demand where consumers are ready to purchase the commodity up to a certain rise of the price of the commodity, therefore, there is a chance to increase the price of the commodity but up to a certain level so in this case, the revenue will definitely go up as this is the case of inelastic demand.