A price increase will always cause a firm's revenue to fall because they will sell less of the good.

Question

Quizplus · Accepted Answer

This statement is not always true. It depends on the price elasticity of demand for the good. If the demand for the good is highly elastic (responsive to price changes) then a price increase will result in a larger percentage decrease in quantity demanded, leading to a decrease in revenue. However, if the demand for the good is inelastic (not very responsive to price changes), then a price increase may actually result in an increase in revenue, even if the quantity sold decreases.

A Price Increase Will Always Cause a Firm's Revenue to Fall