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      Question

      Zia wants to increase total revenue at his

      restaurant. The price elasticity of demand for several dishes that he serves are given in the table below. Price elasticity of demand of Malaysian dishes Dish Price elasticity of demand Nasi lemak 0.7 Satay 2 Rendang 1 Ulam 1.4 Pulut 100 What dish should Zia increase the price of if she wants to increase total revenue?
      A Nasi lemak Correct Answer Incorrect Answer
      B Satay Correct Answer Incorrect Answer
      C Rendang Correct Answer Incorrect Answer
      D Ulam Correct Answer Incorrect Answer

      Solution

      PED for Nasi lemak is less than 1 which means its price inelastic. If Zia raises the price of this dish, qty dd will decrease by a smaller amount than she increases the price, as a result, its total revenue increases.

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