Suppose Starbucks currently charges $2.50 per cup for its latte.If Starbucks raises 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

When demand is inelastic, a price increase leads to a smaller percentage decrease in quantity demanded, resulting in higher total revenue.

Suppose Starbucks Currently Charges $2