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Image Resolution

Image resolution is the amount of pixels per inch/dots per inch(ppi or dpi). Images displayed on computer monitors and saved for the web are 72dpi, and printed products have 300dpi.
When an image's resolution gets changed, its size will change. An on-screen image that is 600x600 pixels at 72dpi will print only 2"x2" at 300dpi.

Whether you're printing CMYK or Grayscale, always save your images at 266 to 300dpi or higher for printing purposes, and 600 dpi or more for lineart. If not, the fuzziness and poor quality of your images will detract from your final product.

The only exception to this rule is if a 72dpi image gets reduced 40% or smaller in the application file. Sizing down an image increases resolution and improves print quality, making the low quality of the image less noticeable. On the other hand, if you increase the size of a low-quality image, it will look even worse in the final print.
Windows Metafiles (.wmf) and graphics captured from the internet (.gifs or .jpgs) are discouraged due to their low resolution. Each graphic imported into an application file, including Illustrator files, must be linked or embedded within the file, or the graphics will bitmap or not display at all.