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If the price elasticity of demand for a product is 0.1 (ignoring the negative sign), to...

If the price elasticity of demand for a product is 0.1 (ignoring the negative sign), to increase the total revenue from selling the product a rational business owner who has the ability to raise or lower or keep the price of the product the same would

A. Leave the price unchanged

B. Increase the price of a product

C. Decrease the price of a product

D. sometimes increase the price of the product and at other times lower the price of the product

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Answer #1

If the elasticity of demand=0.1 which means demand is inelastic

when demand is inelastic then there will be a direct relation between price and total revenue.

Thus in order to increase total revenue, price has to be rised.

ans is B

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