Win–Win. According to an economic consultant, “For your firm, an increase in price is a win–win situation. Your total revenue will increase and your total cost will decrease. Therefore, you’ll earn...

Win–Win. According to an economic consultant, “For your firm, an increase in price is a win–win situation. Your total revenue will increase and your total cost will decrease. Therefore, you’ll earn more profit (equal to Total Revenue – Total Cost).”

a. Concerning the revenue effect of a price hike, what is the consultant assuming about your firm and its customers?

b. Concerning the cost effect of a price hike, what is the consultant assuming about your firm and its customers?