If the price elasticity of demand for apples is 0.8,then a 2.4% increase in the price of apples will decrease the quantity demanded of apples by
A)1.92%,and apples sellers' total revenue will increase as a result.
B)1.92%,and apples sellers' total revenue will decrease as a result.
C)3%,and apples sellers' total revenue will increase as a result.
D)3%,and apples sellers' total revenue will decrease as a result.

Question

Quizplus · Accepted Answer

The price elasticity of demand is 0.8, so a 2.4% increase in price will lead to a 1.92% decrease in quantity demanded (0.8 * 2.4%). Since demand is inelastic (elasticity < 1), total revenue will increase as price increases.

If the Price Elasticity of Demand for Apples Is 0