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When the price of chocolate-covered peanuts increases from $1.55 to $2.00, the quantity demanded decreases from 220 to 160. In this price range, the demand for chocolate-covered peanuts is _____, and total revenue will _____ when the price increases. inelastic; increase inelastic; decrease elastic; increase elastic; decrease

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kaympoey08

Answer:

The answer is elastic; decrease

Explanation:

Price elasticity of demand (PED) = %change in QD/ %change in price

PED = (2-1.55/1.55 ) * 100 / (160-220/220) *100 = 1.065

PED is elastic

Total revenue before price change = 1.55*220= $341.00

Total revenue after price change = 2* 160 = $320.00

Total revenue decreased by $21.00

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