When can a firm lower prices and still increase revenue?
A) when the elasticity of demand is equal to unity
B) when the demand curve is horizontal
C) when the demand curve is vertical
D) when the demand is inelastic
E) when the demand is elastic

Question

Quizplus · Accepted Answer

When demand is elastic, a decrease in price leads to a proportionally larger increase in quantity demanded, thus increasing total revenue.

When Can a Firm Lower Prices and Still Increase Revenue