A firm could lower prices and still increase revenue if
A) demand is elastic.
B) elasticity of demand is equal to unity.
C) demand is inelastic.
D) elasticity of demand is equal to zero.

Question

Quizplus · Accepted Answer

If demand is elastic, a decrease in price will lead to a greater proportionate increase in quantity demanded, resulting in an increase in total revenue. This is because the increase in quantity sold at the lower price will more than offset the decrease in revenue from selling at a lower price.

A Firm Could Lower Prices and Still Increase Revenue If