Microeconomics: Principles, Applications, and Tools (8th Edition)

Published by Prentice Hall
ISBN 10: 0-13294-886-9
ISBN 13: 978-0-13294-886-9

Chapter 5 - Elasticity: A Measure of Responsiveness - Exercises - 5.2 Using Price Elasticity - Page 122: 2.16b

Answer

decreease

Work Step by Step

If a single company increased its price, consumers would likely switch to another company rather than pay the higher price. The price elasticity for the industry is less than one, but the price elasticity for an individual provider is greater, and is probably more than 1.
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