A car dealership estimates that the elasticity of demand for its top models is 0.5.If it raises its prices by 10%,

A) quantity demanded will decrease by 5% and total revenue will increase.
B) there will be no change in either quantity demanded or total revenue because demand is inelastic.
C) quantity demanded will decrease by 5% and total revenue will decrease.
D) quantity demanded will decrease by 10% and total revenue will increase.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, expressed as a percentage change.

Quantity Demanded

Quantity Demanded is the total amount of a good or service that consumers are willing and able to purchase at a given price, over a specified time period.

Total Revenue

The complete amount of income generated by the sale of goods and services before any expenses are deducted.