The Marketing People for AT&T Believe That If They Lower

question 410

Multiple Choice

The marketing people for AT&T believe that if they lower the price of long-distance phone calls by 5 percent, their quantity demanded will increase by 15 percent. If they are correct in their belief, then

• A) the demand for long-distance phone calls is price inelastic.
• B) the total revenue from long-distance phone calls will increase if they lower the price.
• C) the demand for long-distance phone calls is income elastic.
• D) the total revenue from long-distance phone calls will decrease if they lower the price.

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Definitions:

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