Suppose the Absolute Value of the Price Elasticity of Demand

question 9

Multiple Choice

Suppose the absolute value of the price elasticity of demand for meals at Fortune Buffet House is ∞.What happens to sales revenue if the restaurant increases its price by 5 percent?

• A)Sales revenue falls by less than 5 percent.
• B)Sales revenue remains unchanged.
• C)Sales revenue falls by 100 percent.
• D)It cannot be determined without information on prices.

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