If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the Pepsi-Cola Company could increase its total revenue by
A) lowering price.
B) decreasing quantity supplied.
C) leaving price the same.
D) raising price.
E) decreasing supply.

Question

Quizplus · Accepted Answer

When the price of Pepsi-Cola increased, the quantity demanded decreased significantly, indicating that demand is elastic. In such cases, lowering the price would increase total revenue because the percentage increase in quantity demanded would be greater than the percentage decrease in price.

If the Price of Pepsi-Cola Increases from 50 Cents to 60