You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1. In order to increase total revenues from that product, you should
A)increase the price of the software.
B)decrease the price of the software.
C)hold the price of the software constant.
D)increase the supply of the software.

Question

Quizplus · Accepted Answer

When the price elasticity of demand is less than 1, demand is considered inelastic, meaning that the percentage change in quantity demanded is less than the percentage change in price. Therefore, increasing the price will lead to a smaller percentage decrease in quantity demanded, which in turn increases total revenue.

You Are the Sales Manager for a Software Company and Have