Intro to Micro Economics The publisher of a magazine gives his staff the followi

Question

Intro to Micro Economics

The publisher of a magazine gives his staff the following information: He tells the staff, "Our costs arc currently $150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to $3.00 per issue. This will result in our revenue being exactly equal to our cost." Refer to Table 6-4. Which of the following statements is correct? The publisher s analysis is correct only if the demand is perfectly elastic. The publisher's analysis is correct only if the demand is unit-elastic. The publisher's analysis is correct only if the demand is elastic. The publisher's analysis is correct only if the demand is perfectly inelastic.

Explanation / Answer

) Only if demand is perfectly inelastic then change in prices will not change quantity demanded.

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