Asked by Andreas Frånlund on Jul 17, 2024
Verified
If a firm wants to increase revenue, it should increase the selling price of its product if it is currently producing in the ________ portion of its demand curve.
A) elastic
B) inelastic
C) unit elastic
D) perfectly elastic
Inelastic Portion
Part of the demand curve where consumers are less sensitive to price changes, meaning that the quantity demanded changes little with a significant price change.
- Comprehend the tie between demand elasticity and the aggregate of revenue generated.
- Pinpoint the part of the demand curve where altering pricing strategy becomes necessary for a firm to boost its revenue.
Verified Answer
CT
Caleb TumblesonJul 22, 2024
Final Answer :
B
Explanation :
When a firm is operating in the inelastic portion of its demand curve, an increase in the selling price of its product will lead to a less than proportionate decrease in quantity demanded, thus increasing total revenue. This is because consumers are relatively less sensitive to price changes in the inelastic range.
Learning Objectives
- Comprehend the tie between demand elasticity and the aggregate of revenue generated.
- Pinpoint the part of the demand curve where altering pricing strategy becomes necessary for a firm to boost its revenue.
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