When the price of ulcer medication increased by $20 per 100 tablets, a drug company's revenue increased by $10 million. What must its elasticity of demand coefficient (in absolute terms) be?
A) zero
B) less than one
C) greater than one
D) infinitely large

Question

Quizplus · Accepted Answer

The elasticity of demand coefficient being less than one indicates that the demand for the ulcer medication is inelastic. This means that the percentage change in quantity demanded is less than the percentage change in price, which leads to an increase in total revenue when prices are raised.

When the Price of Ulcer Medication Increased by $20 Per