Suppose the price that Rodale Press has set for Prevention magazine is elastic. How would an increase in price affect revenues?

a. They would not change,

b. They would increase,

c. They would increase and then decrease,

d. They would decrease.

Suppose the price that Rodale Press has set for Prevention magazine is elastic. How would an increase in price affect revenues? d. They would decrease.

If an item exhibits elastic demand, it means there is a strong response in terms of quantity when the price changes. A guideline is that for items with elastic demand, revenue and price move in opposite directions - that is, if you lower the price you will sell enough to increase revenue, but if you raise the price, you will lose both sales and revenue.