If a company raises its price and total revenue decreases, what can be inferred about the demand for its product?

When a company raises its price and total revenue decreases, it suggests that the demand for its product is elastic. This means that customers are sensitive to price changes; when the price goes up, they buy less of the product. For example, if a coffee shop increases the price of coffee and sees fewer people buying it, the drop in sales indicates that customers may find cheaper alternatives or decide not to buy coffee at all. In this case, the loss in sales outweighs the benefits of the higher price, leading to lower overall revenue. Therefore, it shows that consumers are likely to change their purchasing behavior significantly when prices rise.