APFIVE Total Revenue and Price Elasticity of Demand
A firm increases the price of its product by 15 percent, causing the quantity demanded to decrease by 20 percent. What is the resulting effect on the firm’s total revenue?
A
Total revenue decreases because demand is inelastic
B
Total revenue increases because demand is elastic
C
Total revenue decreases because demand is elastic
D
Total revenue increases because demand is inelastic
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