If a firm is faced with an elastic supply curve, its revenue will
Answer Details
If a firm faces an elastic supply curve, it means that the quantity supplied by the firm is highly responsive to changes in price. In other words, if the firm raises the price of its product, the quantity supplied will decrease significantly, and if it lowers the price, the quantity supplied will increase significantly.
In this scenario, if the firm raises the price of its product, the total revenue earned by the firm will decrease. This is because the increase in price will cause a decrease in the quantity of the product demanded by consumers. As a result, the firm will sell fewer units of the product at a higher price, leading to a decrease in total revenue.
On the other hand, if the firm lowers the price of its product, the total revenue earned by the firm will increase. This is because the decrease in price will cause an increase in the quantity of the product demanded by consumers. As a result, the firm will sell more units of the product at a lower price, leading to an increase in total revenue.
Therefore, the answer is that the firm's revenue will increase by more than the percentage increase in price if it faces an elastic supply curve.