If the University of Michigan increases the price of football tickets, it will result in increasing revenues if the price elasticity of demand is
A) price inelastic.
B) price elastic.
C) equal to -1.
D) equal to -1.8.

Question

Quizplus · Accepted Answer

If the price elasticity of demand is price inelastic, it means that an increase in price will result in a relatively small decrease in the quantity demanded. As a result, revenues will increase despite the price increase. If the price elasticity is price elastic, the increase in price will result in a relatively large decrease in quantity demanded, leading to a decrease in revenues. A price elasticity of -1 or -1.8 indicates unit elasticity, which means that a change in price will result in an equal change in quantity demanded, resulting in no change in total revenues.

If the University of Michigan Increases the Price of Football