If Carmen's Coffee Company wants to increase total revenue and the price elasticity of demand is 0.43,the company should
A)Increase the price of its coffee.
B)Decrease the price of its coffee.
C)Keep the price constant since a price increase or decrease will cause total revenue to fall.
D)Advertise since this is the only option that will increase total revenue.

Question

Quizplus · Accepted Answer

Since the price elasticity of demand is less than 1 (inelastic), increasing the price will lead to an increase in total revenue because the percentage decrease in quantity demanded will be less than the percentage increase in price.

If Carmen's Coffee Company Wants to Increase Total Revenue and the Price