Suppose Starbucks currently charges $3.25 per cup for its latte.If Starbucks lowers the price to $3.00 per cup,based on the demand curve in the figure above,its total revenue will ________ because the demand for Starbucks latte is ________ over this price range.
A) increase; elastic
B) decrease; elastic
C) increase; inelastic
D) increase; unit elastic
E) not change; unit elastic

Question

Quizplus · Accepted Answer

According to the demand curve in the figure, the demand for Starbucks latte is relatively elastic over this price range. This means that a decrease in price will lead to an increase in the quantity demanded by a larger proportion, resulting in an increase in total revenue for Starbucks. Therefore, the best choice is A.

Suppose Starbucks Currently Charges $3