Question

You manage a nightclub, and lately revenues have been disappointing. Your bouncer suggests that raising drink prices will increase revenues, but your bartender suggests that decreasing drink prices will increase revenues. You aren't sure who is right, but you do know that your bouncer thinks the demand for drinks is _____ and your bartender thinks the demand for drinks is _____.

Answer 1

The bouncer thinks the demand for drinks is inelastic, while your bartender thinks the demand for drinks is elastic

Step-by-step explanation:

What is elastic and Inelastic price?

Inelastic price means that the degree of responsiveness of change in demand is less than proportionate change in price. And what this means in relation to the question here is that, the bouncer feels the drinks has an inelastic demand and that an increase in price will lead to little or no change in demand and therefore the bar can make more profit from sales of drinks.

While on the other hand, elastic demand means that the degree of responsiveness of a change in demand, is more than proportionate to the change in price. Again in relation to the bartender thinking, he feels the drinks have an elastic demand, and that any little change in the prices of the drinks, will lead to a greater reduction in the demand for drinks.