Question

In: Economics

When can a firm lower prices and still increase revenue? a. when the elasticity of demand...

When can a firm lower prices and still increase revenue?

a. when the elasticity of demand is equal to unity b. when the demand curve is horizontal c. when the demand curve is vertical d. when the demand is inelastic e. when the demand is elastic

Solutions

Expert Solution

Ans) the correct option is e. when the demand is elastic

When the demand is elastic, a small decrease in price will lead to a larger increase in quantity


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