Related to the Economics in Practice on page 109: Frank runs a corner delicatessen and one day decides to raise his prices by 10 percent. Total revenue is likely to ________ at the end of the first month of the higher prices since demand is relatively elastic in the ________ term.
A) rise; short
B) fall; short
C) rise; long
D) fall; long

Question

Quizplus · Accepted Answer

According to the information given, Frank's decision to raise prices by 10% is likely to lead to a fall in total revenue at the end of the first month since demand is relatively elastic in the short term. This means that consumers are likely to be sensitive to the price increase and may reduce their purchases, leading to a decline in total revenue. Therefore, the correct choice is D.

Related to the Economics in Practice on Page 109: Frank