When the demand of a product is inelastic, the firm is in a better position to fix:

Option 1 -> When demand is inelastic, consumers are less sensitive to price changes, allowing firms to increase prices without significant loss in sales volume.

Option 2 -> Lower prices would not benefit the firm as quantity demanded won't increase proportionately, leading to reduced total revenue.

Option 3 -> Similar prices don't leverage the advantage of inelastic demand where price increases are possible without losing customers.

Option 4 -> Competitive prices ignore the firm's strategic advantage when demand is inelastic and customers have limited alternatives.

Hence, Option 1: Higher Prices -> When demand is inelastic (percentage change in quantity demanded < percentage change in price), consumers continue purchasing despite price increases because the product is a necessity or has few substitutes. This allows firms to raise prices and increase total revenue since the loss in quantity sold is minimal compared to the gain from higher prices -> correct