You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1.To increase total revenues,you should:
A) increase the price of the software.
B) decrease the price of the software.
C) hold the price of the software constant.
D) increase the supply of the software.

Question

Quizplus · Accepted Answer

Since the price elasticity of demand is less than 1, a price increase would lead to a proportionately smaller decrease in quantity demanded. This means that the total revenue would increase with a price increase. Therefore, the best choice is to increase the price of the software.

You Are the Sales Manager for a Software Company and Have