During a recession, a ﬁrm that faces an elastic demand curve should _____ to increase revenues.
A) engage in price wars
B) offer niche, high-quality goods
C) offer price discounts
D) increase the ﬁxed costs of production

Question

Quizplus · Accepted Answer

Offering price discounts can increase the quantity demanded for a product with elastic demand, thereby increasing revenues, because consumers are more responsive to price changes when demand is elastic.

During a Recession, a ﬁRm That Faces an Elastic Demand