If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25,the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week.The demand for slices of pizza is ________ and the total revenue received by this Pizza Hut ________.
A) elastic; decreases
B) inelastic; decreases
C) elastic; increases
D) inelastic; increases
E) unit elastic; does not change

Question

Quizplus · Accepted Answer

The demand for slices of pizza is elastic because when the price increased, there was a relatively large decrease in quantity demanded. Total revenue received by this Pizza Hut decreases because the decrease in quantity demanded more than offsets the increase in price.

If a Pizza Hut Raises the Price of a Slice