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The manager of a firm believes that she could increase sales by 1 unit per month...

The manager of a firm believes that she could increase sales by 1 unit per month if she lowered the price by 50 cents, but the revenue gained from the additional sale would be less than the revenues lost from the lower price. This indicates that the manager perceives demand to be...

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Answer:- The manager of a firm believes that she could increase sales by 1 unit per month if she lowered the price by 50 cents, but the revenue gained from the additional sale would be less than the revenues lost from the lower price. This indicates that the manager perceives demand to be

Correct Answer:- In the case presented above, the demand is going to be inelastic in nature.

Reason:- In case of inelastic demand, when the price is decreased, it results in increased sales quantity but total revenue earned decreases. This can be understood by the below-mentioned table: which represents the relationship between the elasticity and revenue of the product -

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