Question

A firm is contemplating increasing the price of its good. What would happen to total​ revenue?...

A firm is contemplating increasing the price of its good. What would happen to total​ revenue?

A. It will rise if the demand for their product is price elastic.

B. It will fall if the demand for their product is unit elastic.

C. It will fall if the demand for their product is price inelastic.

D. It will rise if the demand for their product is price inelastic.

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Homework Answers

Answer #1

Ans: It will rise if the demand for their product is price inelastic.

Explanation:

Elastic demand means a percentage change in price leads to more than a percentage change in quantity demanded. On the other hand., inelastic demand means a percentage change in price leads to less than a percentage change in quantity demanded.

A firm is contemplating increasing the price of its good, and if the demand for their product is price inelastic, then demand will not decrease much. Therefore, total revenue will rise.

Thus, option [D] is correct answer.

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