Final answer:
If demand is inelastic, raising the price is typically the best course of action to increase total revenue. This is because the percentage reduction in quantity demanded would be less than the percentage increase in price, resulting in higher total earnings for the seller. The correct option is option c.
Step-by-step explanation:
If demand for a product is inelastic, this implies that consumers are not very sensitive to price changes. In other words, if the price of such a product is increased, the quantity demanded would decrease by a relatively small amount, leading to an increase in total revenue for the seller. So, if demand were inelastic, the best course of action would typically be to raise the price.
Referring to your specific scenario, for a product with an elasticity of demand of 1.4, which indicates elastic demand, lowering the price would generally increase total revenue. Conversely, if the elasticity were 0.6, indicating inelastic demand, raising the price would likely increase total revenue. If elasticity were 1, or unitary, total revenue would remain the same whether the price is raised or lowered.