Related to the Economics in Practice on page 99: Harriet runs a corner delicatessen and one day decides to raise her prices by 20 percent. Total revenue is likely to ________ when she first raises prices since demand is relatively ________ in the short term.
A) rise; inelastic
B) fall; inelastic
C) rise; elastic
D) fall; elastic

Question

Quizplus · Accepted Answer

When demand is inelastic, consumers are less sensitive to price changes, so a price increase leads to a rise in total revenue.

Related to the Economics in Practice on Page 99: Harriet