The local bakery makes such great cinnamon rolls that consumers do not respond much at all to a change in the price.If the owner is only interested in increasing revenue,she should
A)lower the price of the cinnamon rolls.
B)leave the price of the cinnamon rolls unchanged.
C)raise the price of the cinnamon rolls.
D)reduce costs.

Question

Quizplus · Accepted Answer

Since consumers do not respond much to price changes, the demand is inelastic. Raising the price will increase total revenue because the percentage drop in quantity demanded will be less than the percentage increase in price.

The Local Bakery Makes Such Great Cinnamon Rolls That Consumers