Suppose the price of bippitybops is currently 120 per bippit

Suppose the price of bippitybops is currently $120 per bippitybop, shown as point A on the initial graph. Because the price elasticity of demand between points A and B isinelastic , a $15-per-bippitybop decrease in price will lead to NO CHANGE????in total revenue per day. is NO CHANGE correct?

Solution

If price is inelastic (between points A and B), a change in price causes a smaller change in demand. The price will lead to a “CHANGE” in total revenue.

“NO CHANGE” is not the right answer.

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