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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