If a firm wants to increase revenue, it should increase the selling price of its product if it is currently producing in the ________ portion of its demand curve.
A) elastic
B) inelastic
C) unit elastic
D) perfectly elastic

Question

Quizplus · Accepted Answer

When a firm is operating in the inelastic portion of its demand curve, an increase in the selling price of its product will lead to a less than proportionate decrease in quantity demanded, thus increasing total revenue. This is because consumers are relatively less sensitive to price changes in the inelastic range.

If a Firm Wants to Increase Revenue, It Should Increase