According to one study, the price elasticity of demand for restaurant meals is -2.27. This implies that if restaurants want to increase their total revenues they should:
A) increase price.
B) decrease price.
C) leave price unchanged.
D) cannot be determined with the information given.

Question

Quizplus · Accepted Answer

A price elasticity of demand of -2.27 indicates that demand is elastic, meaning that a decrease in price will lead to a proportionally larger increase in quantity demanded, thus increasing total revenue.

According to One Study, the Price Elasticity of Demand for Restaurant