When the price of ulcer medication increased by $20 per 100 tablets, a drug company's revenue increased by $10 million.Its elasticity of demand coefficient (in absolute terms) must be:
A)zero.
B)greater than one.
C)less than one.
D)infinitely large.
E)indeterminate.

Question

Quizplus · Accepted Answer

The elasticity of demand coefficient (in absolute terms) must be less than one since the increase in price resulted in an increase in revenue. This implies that the demand for the medication is inelastic, meaning customers are relatively insensitive to the changes in the medication's price.

When the Price of Ulcer Medication Increased by $20 Per