If a firm finds that its price elasticity of demand is equal to -2.5, a firm can expect that an increase in price will

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    decrease sales and total revenue but profitability will always increase in this scenario because total costs will fall with a lower quantity being produced.
     increase sales, total revenue and profits as higher prices increase revenue per unit.
     decrease total sales and revenue but the effect on profits is unknown without further information.
     increase sales and total revenue but the impact on profitability is unknown without further information.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

0 votes
decrease total sales and revenue but the effect on profits is unknown without further information.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)



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