A Smoothie King Manager Has Estimated That the Price Elasticity

Multiple Choice

A Smoothie King manager has estimated that the price elasticity of demand for exotic fruit smoothies is 2. If the store increases menu prices by 5%, she can expect the quantity of exotic fruit smoothies sold to decrease by _____ and total revenue to _____.

A) 10%; rise
B) 5%; stay constant
C) 10%; fall
D) 2.5%; fall