In an article about the financial problems of Daily Graphic, an economists at Valley View University indicated that the company was losing about GHC20 million a year. The economist suggest that, paper should raise its price from GHC2.5 to GHC3.5 which he estimated would bring in an additional GHC65 million a year. The paper’s publisher rejected the idea, saying that the circulation could drop sharply after a price increase, citing The Ghanaian Times experience after it increase its price to GHC3. What implicit assumption are the publisher and the economist making about demand elasticity?

In an article about the financial problems of Daily Graphic, an
economists at Valley View University indicated that the company was
losing about GHC20 million a year. The economist suggest that, paper
should raise its price from GHC2.5 to GHC3.5 which he estimated would
bring in an additional GHC65 million a year. The paper’s publisher
rejected the idea, saying that the circulation could drop sharply
after a price increase, citing The Ghanaian Times experience after it
increase its price to GHC3. What implicit assumption are the publisher
and the economist making about demand elasticity?