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Moderate

Elasticity of Demand: Pricing Decisions Based on Elasticity

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As the manager of a retail clothing store, you have been asked to change prices for some of the store's products in order to increase the store's revenue. You have determined that the coefficient for elasticity of demand for t-shirts is $2.5$, and the coefficient for elasticity of demand for shorts is $1.2$. In order to increase revenue, you should

A

increase the prices for both t-shirts and shorts.

B

decrease the prices for both t-shirts and shorts.

C

increase the price for t-shirts and decrease the price for shorts.

D

decrease the price for t-shirts and increase the price for shorts.

E

leave the prices of both products unchanged.