Question

Four years ago, the cable television company in your area increased its price by 16 percent. As a result, its total revenue increased. Last year, a new company started providing television service using satellite dishes. This year the cable company increased its price by 16 percent, but total revenue fell. This is likely the result of which of the following?

A. Demand facing an individual store is generally more elastic than demand facing the entire industry.
B. Four years ago, demand for television service was inelastic due to a lack of available substitutes.
C. This year, demand for television service is elastic due to the presence of an available substitute.
D. All of the above are correct.

Answer 1

B. Four years ago, demand for television service was inelastic due to a lack of available substitutes.

Step-by-step explanation:

Inelastic demand is a demand where the demand is not impacted when the price of the goods is rise or not also the reasons is of lacking of subsitutes

In the case when the company rise the price for the second time by 16% so there is an alternative available to the customers and the customers move to the other company so here the revenue of the company would be fallen

hence, the option b is correct