Assume a product has a rather elastic demand. If the producer of the good raises the price of the product, that producer's total revenue will decrease.

Question

Quizplus · Accepted Answer

When a product has a relatively elastic demand, an increase in its price leads to a more than proportional decrease in the quantity demanded. As a result, the producer's total revenue will decrease. This is because any increase in revenue due to higher prices is overshadowed by the decrease in revenue due to fewer units sold.

Assume a Product Has a Rather Elastic Demand