Suppose the demand for meals at a medium-priced restaurant is elastic.If the management of the restaurant is considering raising prices,it can expect the total revenues the restaurant earns to:
A)increase.
B)stay the same.
C)decrease.
D)cannot be determined with the information given.

Question

Quizplus · Accepted Answer

If the demand for meals at the medium-priced restaurant is elastic, it means that customers are very responsive to price changes. If the restaurant raises its prices, customers may choose to eat at a different, more affordable restaurant or reduce the number of times they eat out. As a result, the quantity demanded of meals at this restaurant will decrease significantly, leading to a decrease in total revenue. Therefore, the best choice is C, which indicates a decrease in total revenues.

Suppose the Demand for Meals at a Medium-Priced Restaurant Is