If a liquor store owner decides that raising the price of beer can pay for the construction of a new building, then the owner is assuming that the
A) percentage increase in the price of beer will cause a smaller percentage decrease in the quantity demanded.
B) percentage increase in the price of beer will cause a greater percentage decrease in the quantity demanded.
C) demand for his or her beer is elastic.
D) percentage increase in the price of beer will cause an equal percentage decrease in the quantity demanded.
E) demand for beer is unit elastic.

Question

Quizplus · Accepted Answer

The owner is assuming that the demand for beer is inelastic, meaning that a percentage increase in the price will lead to a smaller percentage decrease in the quantity demanded, allowing for increased revenue despite selling fewer units.

If a Liquor Store Owner Decides That Raising the Price