question 3\nassume that the demand for smart phones is relatively elastic with a price elasticity of demand…

question 3\nassume that the demand for smart phones is relatively elastic with a price elasticity of demand greater than one. if a smart phone producer wants to increase its total revenue, the firm should\na) lower the output and raise the price\nb) lower the output and lower the price\nc) increase output and lower the price\nd) increase output but keep price constant\ne) keep output constant but raise the price

question 3\nassume that the demand for smart phones is relatively elastic with a price elasticity of demand greater than one. if a smart phone producer wants to increase its total revenue, the firm should\na) lower the output and raise the price\nb) lower the output and lower the price\nc) increase output and lower the price\nd) increase output but keep price constant\ne) keep output constant but raise the price

Answer

Brief Explanations:

When demand is elastic (price - elasticity of demand > 1), a decrease in price leads to a proportionately larger increase in the quantity demanded. Total revenue is calculated as price times quantity (TR = P×Q). So, if the firm lowers the price and increases the quantity sold (by increasing output), the increase in quantity will more than offset the decrease in price, leading to an increase in total revenue.

Answer:

C. increase output and lower the price