In an effort to increase revenue for the insurance industry, all insurance companies increased prices by 20 percent. To its dismay, only a 10% increase in revenue was received instead of the 20% increase that was expected.

In an effort to increase revenue for the insurance industry, all insurance companies increased prices by 20 percent. To its dismay, only a 10% increase in revenue was received instead of the 20% increase that was expected.

Prepare an essay that addresses the following questions:

What does this say about the elasticity demand for insurance products? What were the insurance companies assuming the elasticity demand would be?

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