A Physician's Office Expenses Increases 10 Percent, So She Decides

A physician's office expenses increases 10 percent, so she decides to raise the price of office visits. Assuming the demand curve for office visits does not shift, what will happen to the total number of office visits and practice revenues?

A) Office visits and total revenue stay the same if demand is elastic.
B) Office visits and total revenue rise if demand is inelastic.
C) Office visits and total revenue fall if demand is inelastic.
D) Office visits will fall and total revenue will rise if demand is inelastic.
E) Office visits will rise and total revenue will fall if demand is elastic.
For questions 9-12, use the following scenario. You are a consultant and have been employed by Urban General, a large inner-city hospital, to estimate the demand for its services. Your research indicates that the income elasticity of demand for the target market is +0.50; the price elasticity of demand is -0.15; and the cross-price elasticity of demand with respect to the price of services at St. Elsewhere, a near-by hospital, is +0.35. Answer the following questions.