Maria raised the price of her burritos from $2.00 to $2.40 due to an increase on the price of cheese,one of the main ingredients.Her total revenue increased from $300 to $338.We can conclude that the demand for burritos is
A) unit elastic.
B) inelastic.
C) elastic.
D) horizontal.

Question

Quizplus · Accepted Answer

If the demand for burritos were elastic, the increase in price would have resulted in a decrease in total revenue. If the demand were unit elastic or horizontal, there would be no change in total revenue. Therefore, the demand for burritos is inelastic, as the increase in price resulted in only a small decrease in quantity demanded but still an increase in total revenue.

Maria Raised the Price of Her Burritos from $2