How can profits decrease if revenue increases?

Well, for one, if your costs for making, paying people to work making it goes up.

Yes, you're right. But can you make an assumption like that when the question doesn't tell you anything that would suggest that your cost of production has gone up?

It has to do with gross margin. Revenue minus cost of good sold = gross profit.
That doesn't take into consideration all the other costs such as storage, labor cost, interest earning potential, and other investments.

I'm not sure what you're asking.

If someone is embezzling from the company that would reduce profit despite increased revenue but you can't assume that from the question either.

The formula for profit is not that complex and if an increase in price has not reduced demand, then in the absence of something affecting the cost to produce, profit should be up.

You have:

Price increase
No change in demand
Revenue increase
Profit decrease

It seems to me that the only possible missing variable is production cost.

It's unlikely, but I suppose that in fear of the price increase, the company could have increased marketing costs to try and counter a possible reduced demand, but it could be due to any number of other variables.

It sounds like a company that had a need to increase it's price but didn't increase it enough.

The simple answer is increased costs. All sorts of costs from labour, capital, energy and taxes. Currency fluctuation also increases costs, this happened in the UK post Brexit vote, the pound sunk and as most raw materials are priced in dollars it made things more expensive.