Final answer:
To increase total revenue at a price of $4, a company should consider the price elasticity of demand for its product. For elasticity greater than 1, reduce price; for elasticity less than 1, increase price; and for elasticity equal to 1, maintain current price.
Step-by-step explanation:
The question relates to price elasticity of demand, which is a measure of how much the quantity demanded of a product responds to a change in price. If a company wants to increase total revenue at a price of $4, it must consider the elasticity of demand for its product. Based on the provided information, if elasticity is greater than 1, it indicates that demand is elastic; a lower price will increase the quantity demanded enough to raise total revenue. If elasticity is less than 1, demand is inelastic, meaning an increase in price will lead to a higher total revenue as the reduction in quantity demanded won't be as significant. Lastly, if elasticity is exactly 1 (unitary elasticity), it suggests that total revenue is maximized, and any change in price will not affect the total revenue.