APFIVE Total Revenue and Price Elasticity of Demand
A firm increases the price of its product by 15% and observes that the quantity demanded falls by 20%. What happens to the firm’s total revenue as a result of this price change?
A
Total revenue increases because demand is inelastic
B
Total revenue decreases because demand is elastic
C
Total revenue decreases because demand is inelastic
D
Total revenue increases because demand is elastic
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