Question

What is the impact of an increase in worker productivity when demand is relatively more​ elastic? A. An increase in sales revenue received by the firm. B. A small increase in the price received by the firm. C. A large increase in the price received by the firm. D. A decline in sales revenue received by the firm.

Answer 1

Answer:

A) An increase in sales revenue received by the firm.

Explanation:

If worker productivity increases, the total output produced by the company will increase while the average cost per unit produced will decrease. This should result in a rightward shift of the supply curve that decreases the product's price at every level of quantity demanded. Since the demand is elastic, a small decrease in price will result in a larger increase in quantity demanded.