Question

You sell t-shirts in the street corner in order to support some of your tuition costs. Around the middle of the semester, your friend Carlos gives you the following advice: "if you increase the price of each t-shirt you sell you will be able to make a lot more money selling your t-shirts". For Carlos to be right, the price elasticity of t-shirts must be price:
a) constant
b) elastic
c) unitary
d) inelastic

Answer 1

Answer: (B) Inelastic

Explanation:

 According to the question, when the price of the t-shirt get increased then it generate the high revenue. This result into the decrease in the given quantity and it is smaller change as compared to the change in the price.

This process of the quantity results into the good in the inelastic. Inelastic is the term which is refers to the static quantity of the various types of good and the services and its price are get changed.

Therefore, Option (B) is correct.