Sinead raises the price of the combo meals that she sells by 30 percent, and as a result the quantity demanded of combo meals decreases by 15 percent. The demand for combo meals is _____, and Sinead's total revenue _____ as a result of the price change.
A) elastic; increases
B) inelastic; decreases
C) elastic; decreases
D) inelastic; increases

Question

Quizplus · Accepted Answer

The demand is inelastic because the percentage decrease in quantity demanded (15%) is less than the percentage increase in price (30%), indicating that consumers are relatively unresponsive to the price change. Sinead's total revenue increases because the effect of the price increase more than offsets the decrease in quantity sold, leading to higher overall revenue.

Sinead Raises the Price of the Combo Meals That She