Winged Treasures is a specialty store that sells butterfly ornaments.The owner wants to increase her total revenue and knows that the price elasticity of demand for her product is -0.4.What should she do to her price?
A) lower it by a relatively large amount
B) leave it unchanged and use another way to increase sales
C) decrease it to zero
D) raise it by any amount
E) lower it by a relatively small amount

Question

Quizplus · Accepted Answer

Since the price elasticity of demand is -0.4, which is inelastic, raising the price will increase total revenue because the percentage decrease in quantity demanded will be less than the percentage increase in price.

Winged Treasures Is a Specialty Store That Sells Butterfly Ornaments