All things being equal, if a firm finds the demand for one of its products is inelastic, it can increase its total revenues by
A)raising its price.
B)lowering its price.
C)reducing fixed costs.
D)reducing variable costs.
E)reducing both fixed and variable costs.

Question

Quizplus · Accepted Answer

If the demand for a product is inelastic, it means that the quantity demanded does not change significantly when the price changes. Therefore, if the firm raises its price, the increase in revenue from the higher price will outweigh the decrease in revenue from the lower quantity demanded. As a result, raising the price will increase total revenues.

All Things Being Equal, If a Firm Finds the Demand