Suppose the president of a textbook publisher argues that a 10 percent increase in the price of textbooks will raise total revenue for the publisher. It can be concluded that the company president thinks that demand for textbooks is:
A) unitary elastic.
B) inelastic.
C) elastic.
D) perfectly inelastic.

Question

Quizplus · Accepted Answer

If the president believes that a 10 percent increase in price will raise total revenue, this indicates that demand is inelastic. Inelastic demand means that a change in price has a relatively small impact on the quantity demanded, resulting in an overall increase in revenue due to the higher price. If demand were elastic, the increase in price would lead to a significant decrease in quantity demanded, resulting in lower revenue overall.

Suppose the President of a Textbook Publisher Argues That a 10