You are the newly appointed sales manager of the Rock Computer Tablets Company and have been charged with the task of increasing revenues. Your economics consultants have informed you that at present price and output levels, price elasticity of demand for your product is less than one. You should
A)decrease prices.
B)increase prices.
C)hold prices constant and increase supply.
D)cut advertising expenditures to save money.

Question

Quizplus · Accepted Answer

Since the price elasticity of demand is less than one, the demand for the product is inelastic. This means that a price increase will lead to a smaller percentage decrease in quantity demanded, potentially increasing total revenue.

You Are the Newly Appointed Sales Manager of the Rock