Tina and Brian work for the same recording company. Tina claims they would be better off by raising the price of their CDs, while Brian claims they would be better off by lowering the price. Choose the correct statement.
A)Tina thinks the demand for CDs has price elasticity of demand equal to zero, and Brian thinks price elasticity of demand equals 1.
B)Tina thinks the demand for CDs has price elasticity of demand equal to 1, and Brian thinks price elasticity of demand equals zero.
C)Tina thinks the demand for CDs is price elastic, and Brian thinks it is price inelastic.
D)Tina thinks the demand for CDs is price inelastic, and Brian thinks it is price elastic.
E)Tina and Brian should stick to singing and forget about economics.

Question

Quizplus · Accepted Answer

Tina and Brian have opposite opinions on what would happen to demand if the price of their CDs changes. Tina believes that if the price of CDs is raised, revenue would increase, suggesting that she thinks the demand is relatively inelastic. Brian, on the other hand, believes that if the price of CDs is lowered, revenue would increase, suggesting that he thinks the demand is relatively elastic. Therefore, Tina thinks the demand for CDs is price inelastic, and Brian thinks it is price elastic. The correct answer is D.

Tina and Brian Work for the Same Recording Company