This summer the lobster catch in Maine has been especially large, but instead of celebrating the fisherman are suffering from a lower total revenue. (Source: New York Times, July 28, 2012) We learn from the article that despite the larger quantity of lobster caught, the total revenue of the fisherman has decreased. This fact means that the demand for lobster is
A) unit elastic.
B) elastic.
C) inelastic.
D) perfectly elastic.

Question

Quizplus · Accepted Answer

The decrease in total revenue despite the larger quantity of lobster caught suggests that the increase in supply has not been met with a proportional increase in demand. This indicates that the demand for lobster is relatively inelastic, meaning that changes in price have a relatively small effect on the quantity demanded.

This Summer the Lobster Catch in Maine Has Been Especially