Suppose that ABC Beer Brewer faces a linear demand curve and that the current pr
ID: 1092116 • Letter: S
Question
Suppose that ABC Beer Brewer faces a linear demand curve and that the current price for its beer is set at a point where the price elasticity is 1.60. If ABC Beer Brewer increases the product price: A) the demand becomes more elastic and total revenue increases. B) the demand becomes less elastic and total revenue increases. C) the demand becomes less elastic and total revenue decreases. D) the demand becomes more elastic and total revenue decreases. E) the demand becomes more elastic and total revenue remains the same.
Explanation / Answer
D) the demand becomes more elastic and total revenue decreases.