KFC raises the price of its chicken nuggets. The price elasticity of demand for KFC chicken nuggets is 0.8. What happens to KFC's total revenue?
A) It decreases.
B) Nothing.
C) It increases.
D) It becomes negative.
E) It might change, but more information is needed to determine if it increases, decreases or does not change.

Question

Quizplus · Accepted Answer

Since the price elasticity of demand for KFC chicken nuggets is less than 1 (inelastic), an increase in price will lead to an increase in total revenue. This is because the percentage decrease in quantity demanded is less than the percentage increase in price.

KFC Raises the Price of Its Chicken Nuggets