Mingilton Meats increased the price of their bologna from $2.00 a pound to $3.00 a pound. After doing this they noticed a decrease in total revenue. This is because
A. the demand for the meat is elastic
B. the demand for the meat is inelastic
C. the demand is unitarily elastic
D. the meat was too old to purchase
E. Cannot tell from the information given
Answer: (A) The demand is elastic. Any increase in price that creates a decrease in total revenue is said to be elastic. (B) is not correct, because in order for the demand to be inelastic, the total revenue would have to have increased. Unitary elasticity (C) occurs when the total revenue stays the same when the price of a product is changed. There is not enough information given to know whether or not the meat is old (D). Elasticity can be determined from the information given, so (E) is incorrect.