Revenue increases or decreases after price increase

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Price elasticity of demand will determine whether the firm's overall revenue increases or decreases after a price increase. If the demand for the product is inelastic, any increase in the product's price will result in an increase in the firm's overall revenue, and any decrease in the product's price will result in a decrease in the firm's overall revenue. Therefore, it is vital to determine the firm's demand function and the price elasticity of demand for the products it manufactures, such as disposable contact lenses, wetting solutions, and other healthcare-related items. The entire revenue of the company will increase with a price increase if the price elasticity of demand is less than 1, and the total revenue of the company will decrease with a price decrease.

Reference no: EM133235615

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