Suppose a decrease in the supply of bottled water results in a decrease in revenue.What does this indicate?
A)That the demand for bottled water is inelastic in the price range considered.
B)That the demand for bottled water is elastic in the price range considered.
C)That the supply of bottled water is inelastic in the price range considered.
D)That the supply of bottled water is elastic in the price range considered.

Question

Quizplus · Accepted Answer

If a decrease in supply leads to a decrease in revenue, it suggests that consumers are responsive to changes in price and are sensitive to changes in the quantity of bottled water available. This is characteristic of elastic demand, where a small change in price results in a significant change in quantity demanded.

Suppose a Decrease in the Supply of Bottled Water Results