An ‘App’ for a phone has a perfectly elastic price elasticity of supply. At present, each ‘App’ sells for $10 and 200 ‘Apps’ are sold each day. As the ‘App’ gains popularity, demand rises by 50% at every price. What will be the effect of this change in demand?
- AThe price increases by 50% and the firm’s revenue increases by 50%.
- BThe price increases by less than 50% and the firm’s revenue increases by less than 50%.
- CThe price stays the same and the firm’s revenue increases by 50%.
- DThe price stays the same and the firm’s revenue increases by an infinite amount.