If a firm increases the price of its product and the quantity demanded decreases significantly due to the availability of substitutes, how is the price elasticity of demand for that product characterized?

When a firm raises the price of its product and many customers stop buying it because they can easily find similar products, the demand for that product is considered elastic. This means that the quantity demanded changes a lot in response to price changes. For example, if the price of a popular soda goes up, people might switch to a cheaper brand or a different drink altogether. In this case, the firm might actually make less money because fewer people are buying its soda now. Therefore, when demand is elastic, increasing the price can lead to a decrease in total revenue for the firm.