Table 5 -2
The publisher of a magazine gives his staff the following information:
He tells the staff, "Our costs are currently US$150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to US$3 per issue. This will result in our revenue being exactly equal to our cost."
Which of the following statements is correct?
A) The publisher's analysis is correct only if the demand is unit elastic.
B) The publisher's analysis is correct only if the demand is perfectly inelastic.
C) The publisher's analysis is correct only if the demand is elastic.
D) The publisher's analysis is correct only if the demand is perfectly elastic.

Question

Table 5 -2
The publisher of a magazine gives his staff the following information:
 He tells the staff, "Our costs are currently US$150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to US$3 per issue. This will result in our revenue being exactly equal to our cost."
Which of the following statements is correct?
A) The publisher's analysis is correct only if the demand is unit elastic. 
B) The publisher's analysis is correct only if the demand is perfectly inelastic. 
C) The publisher's analysis is correct only if the demand is elastic. 
D) The publisher's analysis is correct only if the demand is perfectly elastic.

Quizplus · Accepted Answer

The Answer of Table 5 -2
The publisher of a magazine gives his staff the following information:
 He tells the staff, "Our costs are currently US$150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to US$3 per issue. This will result in our revenue being exactly equal to our cost."
Which of the following statements is correct?
A) The publisher's analysis is correct only if the demand is unit elastic. 
B) The publisher's analysis is correct only if the demand is perfectly inelastic. 
C) The publisher's analysis is correct only if the demand is elastic. 
D) The publisher's analysis is correct only if the demand is perfectly elastic.

Table 5 -2 The Publisher of a Magazine Gives His Staff the Following