If Matthew raises the price of his muffins from $2 to $3 and his total revenue increases from $35,000 to $38,000, then
A) the demand for Matthew's muffins in this price range is price elastic
B) the demand for Matthew's muffins in this price range is price inelastic
C) the demand for Matthew's muffins in this price range is unit elastic
D) the percentage change in quantity demanded must exceed the percentage change in price
E) we know this is impossible because it violates the law of demand

Question

Quizplus · Accepted Answer

The demand for Matthew's muffins is price inelastic because an increase in price led to an increase in total revenue, indicating that the percentage change in quantity demanded is less than the percentage change in price.

If Matthew Raises the Price of His Muffins from $2