Which of the following determines a firm's revenue when it changes the price of its product?
A)The firm's cost function
B)The elasticity of the firm's total product curve
C)The plant size used by the firm in the long run
D)The price elasticity of demand for the firm's product
E)The price elasticity of supply

Question

Which of the following determines a firm's revenue when it changes the price of its product?​
A)The firm's cost function
B)The elasticity of the firm's total product curve
C)The plant size used by the firm in the long run
D)The price elasticity of demand for the firm's product
E)The price elasticity of supply

Quizplus · Accepted Answer

The price elasticity of demand for the firm's product determines how much the quantity demanded will change in response to a change in price, which ultimately determines the firm's revenue. If demand is elastic, a small change in price will lead to a large change in quantity demanded, resulting in a decrease in revenue. If demand is inelastic, a change in price will have a relatively small effect on quantity demanded, resulting in an increase in revenue.

Which of the Following Determines a Firm's Revenue When It