According to one study,the price elasticity of demand for restaurant meals is -2.27.This implies that if restaurants want to increase their total revenues they should:
A)increase prices.
B)decrease prices.
C)leave prices unchanged.
D)cannot be determined with the information given.

Question

Quizplus · Accepted Answer

The negative sign of the price elasticity of demand suggests an inverse relationship between price and quantity demanded. In this case, the magnitude of the elasticity implies that a 1% increase in price would result in a 2.27% decrease in quantity demanded. To increase total revenues, restaurants should therefore decrease prices, as the increase in quantity demanded will more than offset the decrease in price per unit.

According to One Study,the Price Elasticity of Demand for Restaurant