If a firm knows that the demand for its product is inelastic,it could generate more revenue by:
A) lowering the price, because the resulting change in sales would be relatively large.
B) raising the price, because the resulting change in sales would be relatively large.
C) lowering the price, because the resulting change in sales would be relatively small.
D) raising the price, because the resulting change in sales would be relatively small.

Question

Quizplus · Accepted Answer

When demand is inelastic, a price increase leads to a relatively small decrease in quantity demanded, allowing the firm to generate more revenue despite selling fewer units.

If a Firm Knows That the Demand for Its Product