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Question 25 (5 points) Suppose a firm in each of the two markets listed below were...

Question 25 (5 points) Suppose a firm in each of the two markets listed below were to increase its price by 30 percent. In which pair would the firm in the first market listed experience a dramatic decline in sales, but the firm in the second market listed would not? Question 25 options:

a) oil and natural gas

b) cable television and gasoline

c) restaurants and MP3 players

d) movie theaters and ballpoint pens

business   economics   
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Answer #1

Since the demand for gasoline is inelastic because it usually is a monopoly market so an increase in price will increase the revenue whereas the demand for cable television is elastic as it operates in an oligopoly market so an increase in price will lead to a decrease in the total revenue

Option(B)

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