"Smitty's Hot Boiled Peanuts" recently reported that its revenue increased from the previous quarter,along with its profits.What is the most likely explanation for this change,if the only change Smitty's made was in its price?

Question

Quizplus · Accepted Answer

If the only change Smitty's made was in its price and yet its revenue and profits increased, it suggests that the demand for Smitty's hot boiled peanuts is inelastic - that is, customers continue to buy roughly the same quantity of peanuts even when the price increases. If Smitty's increased its price and still saw an increase in revenue and profits, it suggests that the increase in price more than offset any decrease in the quantity of peanuts sold, which suggests inelastic demand.

"Smitty's Hot Boiled Peanuts" Recently Reported That Its Revenue Increased