Question

For the first time in two years, Big G (the cereal division of General Mills) raised cereal prices by 3 percent. If, as a result of this price increase, the volume of all cereal sold by Big G changed by -5 percent, what can you infer about the own price elasticity of demand for Big G cereal? It is . Can you predict whether revenues on sales of its Lucky Charms brand increased or decreased? Yes - it decreased. No - you can't tell. Yes - it increased.

Answer 1

Yes, it Increased is the right answer.

Step-by-step explanation:

When demand is inelastic, increase in price will increase total revenue.