The correct answer is (b) increase only if the demand for the output is relatively elastic.
If the demand for the output is relatively inelastic (i.e., the percentage change in quantity demanded is less than the percentage change in price), then a price increase will result in an increase in total revenue. In this case, the firm would be better off raising the price of its output to increase total revenue.
Therefore, the statement "If a firm raises the price of its output, its total revenue will always increase" is not true. The change in total revenue will depend on the price elasticity of demand for the output.