Final answer:
Increasing the price of a pain reliever from $15 to $25 would increase total revenue due to price elasticity of demand.
Step-by-step explanation:
The manufacturer of a pain reliever would increase total revenue by increasing the price from $15 to $25. Increases in price will offset the decrease in the number of units sold but increase the total revenue. This concept is known as price elasticity of demand.
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. When the price of a product increases, the demand for that product tends to decrease. However, if the demand for a product is relatively inelastic, meaning that it is not very responsive to changes in price, increasing the price can actually increase total revenue.
For example, if the pain reliever has a price elasticity of 0.6, a 10% increase in price would result in a 6% decrease in quantity sold. However, the increase in price would more than offset the decrease in quantity, leading to an overall increase in total revenue.