A price cut will increase the revenue a firm receives if the demand for its product is
A)elastic.
B)inelastic.
C)unit elastic.
D)straight elastic.

Question

Quizplus · Accepted Answer

A price cut will increase revenue only if the demand for the product is elastic, meaning that a decrease in price will lead to a proportional increase in quantity demanded, resulting in a greater increase in total revenue. In the case of inelastic demand, a price cut will lead to a decrease in revenue as the decrease in price will not lead to a significant increase in quantity demanded.

A Price Cut Will Increase the Revenue a Firm Receives