Question

For a particular company's product, the % change in quantity demanded is smaller than the % change in price that caused the change in quantity demanded. If the company increased the price of that product, total revenue from sales of that product would most likely:

Answer 1

The total revenue is likely to increase.

Step-by-step explanation:

If the proportionate change in quantity demanded is smaller than the proportionate change in quantity, it implies that the price elasticity of demand is relativity inelastic.

In this situation, if the company increases the price of the product, the decline in quantity demanded due to the increase in price will be less than proportionate.

So it is likely that the total revenue from sales will increase because of the increase in price.