If Pete raises his price of muffins from $2 to $3 and hissales revenue increases

Question

If Pete raises his price of muffins from $2 to $3 and hissales revenue increases from $35,000 to $38,000, then: a) the demand for Pete's muffins in this range is pirceelastic b) the demand for Pete's muffins in this range is princeinelastic c) the demand for Pete's muffins in this range is unitelastic d) the percentage change in quantity demanded must exceed thepercentage change in product price e) this is impossible since this would violate the law ofdemand If Pete raises his price of muffins from $2 to $3 and hissales revenue increases from $35,000 to $38,000, then: a) the demand for Pete's muffins in this range is pirceelastic b) the demand for Pete's muffins in this range is princeinelastic c) the demand for Pete's muffins in this range is unitelastic d) the percentage change in quantity demanded must exceed thepercentage change in product price e) this is impossible since this would violate the law ofdemand

Explanation / Answer

B. the demand for Pete's muffins in this range is priceinelastic. Explanation With an increase in price, an increase in total revenue isinelastic.

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