If a good has a price elasticity of demand coefficient greater than 1, total revenue can be increased by raising the price.

Question

If a good has a price elasticity of demand coefficient greater than 1, total revenue can be increased by raising the price.
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Quizplus · Accepted Answer

If the price elasticity of demand coefficient is greater than 1, it means that demand is highly responsive to changes in price. Therefore, if the price is increased, the quantity demanded will decrease by a greater percentage, resulting in a decrease in total revenue, not an increase. On the other hand, if the price elasticity of demand coefficient is less than 1, it means that demand is relatively inelastic, and an increase in price will result in a smaller decrease in quantity demanded, leading to an increase in total revenue.

If a Good Has a Price Elasticity of Demand Coefficient