If the firm in Figure 23.4 raised the price of its product above $4, the firm would
A) Increase its profits.
B) Reduce its total revenue to zero.
C) Increase its total revenue but not its profits because costs would increase.
D) Not affect revenues but increase profits because costs would decrease.

Question

If the firm in Figure 23.4 raised the price of its product above $4, the firm would
A) Increase its profits. 
B) Reduce its total revenue to zero. 
C) Increase its total revenue but not its profits because costs would increase. 
D) Not affect revenues but increase profits because costs would decrease.

Quizplus · Accepted Answer

If the firm raises the price above $4, it would exceed the point of maximum revenue on the demand curve and enter the inelastic region, causing total revenue to decrease to zero.

If the Firm in Figure 23