Assume the Price Elasticity of Demand for MC Pretzel Co

question 15

Multiple Choice

Assume the price elasticity of demand for MC Pretzel Co.pretzels is 0.8.If the company increases the price of each bag of pretzels,total revenue will

• A)Decrease because fewer bags will be sold.
• B)Increase because demand is elastic and revenue will rise.
• C)Increase because the percentage increase in price is greater than the percentage change in quantity demanded.
• D)Be impossible to predict because the percentage change in price is not known.

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