Economics 9708 · AS & A Level · Price elasticity of demand

Price elasticity of demand — practice question

A firm’s product faces perfectly elastic demand. What effect would there be on the firm’s revenue if it raises its price by 5%?

  • AIts revenue will be unchanged.
  • BIts revenue will decrease by 5%.
  • CIts revenue will fall to zero.
  • DIts revenue will increase by 5%.

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