Suppose the demand for meals at a medium-priced restaurant is elastic.If the management of the restaurant is considering raising prices,it can expect a relatively:
A)large decrease in quantity demanded.
B)large decrease in demand.
C)small decrease in quantity demanded.
D)small decrease in demand.

Question

Quizplus · Accepted Answer

Since demand is elastic, a small increase in price will lead to a large decrease in quantity demanded. Therefore, if the restaurant raises prices, it can expect a relatively large decrease in quantity demanded. Option (B) is incorrect as the elasticity of demand refers to the change in quantity demanded and not in demand itself. Option (C) and (D) are incorrect as the term "small" is not applicable in this scenario where demand is elastic.

Suppose the Demand for Meals at a Medium-Priced Restaurant Is