Do higher prices lead to increased revenues for a company? a. alwaysb. sometimesc. neverd. only when demand is elastic

Question

Business

Kareem Murillo

12 May, 17:51

Do higher prices lead to increased revenues for a company? a. alwaysb. sometimesc. neverd. only when demand is elastic

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Answers (1)

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Shaun Drake · Answer 1

sometimes

Explanation:

Rising prices will lead to an increase in a firm's revenue if it does not cause a decrease in the quantity demanded. The way to measure the impact of price increases on the quantity demanded is by calculating elasticity. If demand is elastic, small variations in price are sufficient to have a considerable impact on demand. When demand is inelastic, the increase in price does not significantly impact demand, so demand will be inelastic. In this case, the price increase increases the firm's revenue.