How can a firm increase total revenue?
A) when demand is elastic and price decreases
B) when demand is elastic and price increases
C) when demand is unitary elastic and price increases
D) when demand is unitary elastic and price decreases
E) when demand is inelastic and price decreases

Question

Quizplus · Accepted Answer

When demand is elastic, a decrease in price will lead to an increase in quantity demanded. This increase in quantity demanded will be large enough to more than offset the decrease in price, resulting in an increase in total revenue. Therefore, if a firm wants to increase its total revenue, it should decrease the price when demand is elastic.

How Can a Firm Increase Total Revenue