Specialty chocolate bars with a high cocoa content have been drawing a lot of attention in gourmet circles in 2008 but the price of cocoa beans has increased more than 44 percent in this time period. In response to the increase in the price of cocoa beans, Rogue Chocolatier has increased the price of their gourmet chocolate bars by 20 percent. Rogue notices their firm's total revenue increased after the price increase. We can determine that the demand for Rogue's bars is
A) inelastic.
B) elastic.
C) perfectly inelastic.
D) unit elastic.

Question

Quizplus · Accepted Answer

When the price of a product increases and total revenue also increases, it indicates that the demand for the product is inelastic. This means that consumers are not significantly reducing their quantity demanded in response to the price increase.

Specialty Chocolate Bars with a High Cocoa Content Have Been