Final answer:
Eric should decrease the price of his elastic-demand jewelry boxes to increase total revenue as a larger quantity will be sold to offset the price reduction.
Step-by-step explanation:
When dealing with the concept of price elasticity of demand in the context of Eric's jewelry boxes, understanding whether the demand for his product is elastic or inelastic is crucial for making pricing decisions that affect total revenue. Given that the demand for jewelry boxes is elastic, Eric should consider decreasing the price; this is because an elastic demand implies that a percentage decrease in price will result in a greater percentage increase in quantity demanded, thereby increasing total revenue. The opposite strategy applies if demand were inelastic, where an increase in price would increase total revenue because the percentage decrease in quantity demanded would be less than the percentage increase in price. It is also important to note that if elasticity were precisely 1, meaning unitary elasticity, then any price change would not affect revenue, thus suggesting that maintaining the current price would be the best strategy.