In Massachusetts, the price elasticity of license plates is 3.5 and their price is $50. Massachusetts is:
A. not maximizing revenue since elasticity is greater than 1 and revenue will decrease after a price decrease when demand is elastic.
B. not maximizing revenue since elasticity is greater than 1 and revenue will increase after a price decrease when demand is elastic.
C. maximizing revenue since elasticity is greater than 1 and revenue will decrease after a price decrease when demand is elastic.
D. maximizing revenue since elasticity is greater than 1 and revenue will increase after a price decrease when demand is elastic.
Answer: B
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