Suppose when Nablom's Bakery raised the price of its breads by 10 percent, the quantity demanded fell by 15 percent.What was the effect on sales revenue?
A)Sales revenue increased.
B)Sales revenue remained unchanged.
C)Sales revenue decreased.
D)It cannot be determined without information on prices.

Question

Quizplus · Accepted Answer

When the price of bread increased by 10 percent, the quantity demanded fell by 15 percent. This implies that the demand for bread is elastic. When price and quantity demanded both decrease, sales revenue will also decrease. Therefore, the effect on sales revenue is that it decreased.

Suppose When Nablom's Bakery Raised the Price of Its Breads