Suppose that an Italian ice cream firm is facing a linear demand curve and that the current price for the Italian ice cream is set at a point where the price elasticity is 1.7. If the firm decreases the product price, the total revenue will:
A. increase if at the new price, the elasticity is still greater than 1.
B. increase if at the new price, the elasticity is lower than 1.
C. decrease regardless of the size of the price decrease.
D. increase regardless of the size of the price decrease.
Answer: A
Economics
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