Final answer:
Increasing the price of a new drug from $15 to $25 would increase total revenue. The concept of price elasticity of demand should be considered when deciding to increase or decrease the price.
Step-by-step explanation:
The manufacturer of a new drug would increase total revenue by increasing the price from $15 to $25. This is because an increase in price can offset the decrease in the number of units sold, leading to an increase in total revenue. It is important to consider the concept of price elasticity of demand when deciding to increase or decrease the price of a product.
If the demand for the drug is elastic (elasticity is greater than 1), increasing the price will result in a decrease in the quantity demanded, but the price increase will compensate for this decrease, resulting in an overall increase in total revenue. On the other hand, if the demand is inelastic (elasticity is less than 1), increasing the price will lead to a relatively smaller decrease in quantity demanded, again resulting in an increase in total revenue.