A company sells a product that has elastic demand. If they increase the price of the product by 10%, what is the likely effect on total revenue, assuming all other factors remain constant?

When a company sells a product with elastic demand, it means that customers are very sensitive to price changes. If the company raises the price by 10%, many customers may decide to buy less of the product or switch to a cheaper alternative. As a result, total revenue, which is the money the company makes from sales, is likely to decrease. For example, if the product usually sells for $10 and the company increases the price to $11, some customers might stop buying it altogether, leading to fewer sales and lower overall revenue. Therefore, in the case of elastic demand, an increase in price often leads to a drop in total revenue.