When the price of fresh fish increases 10%, quantity demanded decreases 5%. The price elasticity of demand for fresh fish is ________ and total revenue from fresh fish sales will ________.
A) inelastic; increase
B) inelastic; decrease
C) elastic; decrease
D) elastic; increase

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price, which in this case is -5%/10% = -0.5, indicating inelastic demand (absolute value less than 1). When demand is inelastic, an increase in price leads to an increase in total revenue.

When the Price of Fresh Fish Increases 10%, Quantity Demanded