A company producing sports equipment wishes to increase its total revenue. Should it increase or decrease its price when the product's price elasticity of demand is equal to -0.3?

(a) Increase - the good is price inelastic and in order to increase TR the firm should increase its price.
(b) Decrease - the good is price elastic and in order to increase TR the firm should decrease its price.
(c) Increase - the good is price elastic and in order to increase TR the firm should increase its price.
(d) Decrease - the good is price inelastic and in order to increase TR the firm should decrease its
price.


Answer: (a) Increase - the good is price inelastic and in order to increase TR the firm should increase its price.

Economics

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