If a Firm Finds the Demand for One of Its

question 55

Multiple Choice

If a firm finds the demand for one of its products is inelastic, it can increase its total revenues by

• A) lowering its price.
• B) increasing fixed costs only.
• C) increasing variable costs only.
• D) increasing both fixed and variable costs.
• E) raising its price.

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Definitions:

Bounded Rationality Model

A concept suggesting that individuals make decisions based on the limited information available to them and their own mental processing limitations.

Decision Alternatives

The different options or courses of action available to decision-makers.

Potential Value

The future worth or usefulness that something holds, not currently realized but that could be achieved under certain conditions.

Maximum Possible Gain

The highest achievable outcome or benefit from a specific action or set of actions in a given scenario.