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1. Jack, a music major, is perusing Jill's notes for her economics class, where she has written that "total revenues will rise with price rises only if demand is elastic." Jack tells Jill this is nonsense because firms can always increase their revenues by raising price. How should Jill respond?
Expert Solution
Jill can respond in a way that Jack has made a wrong statement because if the demand is elastic and price will be raised then demand will get reduced because of its elastic nature and then the reduced demand will lead to Decline in total revenues .Hence this statement is wrong that firm can Always increase their revenue by raising price because in case of elastic demand , the raising of price will reduce the demand and revenue will also decline
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