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:

Annuity Table

A financial tool used to determine the present or future value of an annuity investment by applying various interest rates and time periods.

PVFA Factors

Present Value Factor for Annuities, used in calculating the present value of a series of equal payments at regular intervals.

Effective Interest Rate

The actual return on an investment, considering the compounding of interest.

Compounding

The process of generating earnings on an asset's reinvested earnings, leading to exponential growth over time.