Question

A local golf club receives total revenue of $10,000 per month when it charges $10 per person, and $12,000 in total revenue when it charges $12 per person. Over that range of prices, the business faces:

Question 3 options:

	Inelastic demand
	Unitary elastic demand
	Elastic demand
	Perfectly elastic demand
	Perfectly inelastic demand

Answer 1

If there is positive relationship between price change and total revenue change, then the demand is inelastic.

And, if there is negative relationship between price change and total revenue change, then the demand is elastic.

The increase in price from $10 to $12 cause an increase in total revenue from $10000 to $12000. It means positive relationship between price change and total revenue change.

So, over that range of price the business faces a inelastic demand.

So, the correct answer is an option (a).