If an 8% decrease in price leads to a 4% increase in the
quantity demanded of the good, as a result of the price change, the
total revenue for this product will:
a) decrease
b) increase
c) not change
d) double
If a 12% increase in price leads to a 6% decrease in quantity
demanded of the good, as a result of the price change, the total
revenue for the product will:
a) not change
b) decrease
c) increase
d) fall by half
Which of the following explains why a firm would be interested
in knowing the price elasticity of demand for a good it
sales?
a) Knowing the price elasticity of demand allows the firm to
calculate how changes in the price of the good will affect the
firm's total profit.
b) The price elasticity of demand allows the firm to calculate how
changes in the price of the good will affect the firm's total
revenue
c) The price elasticity of demand can be used to determine the
impact of changes in income on quantity sold
d) Knowing The price elasticity of demand allows the firm to
determine how the cost of producing additional units of the good
will change
If the price of a good is decreased and total revenue received
from the sale of the good does nt change, then the price elasticity
of demand for the good is:
a) unitary
b) elastic
c) inelastic
d) none of the above
Assume you own a small boutique hotel. In an attempt to raise
revenue, you reduce your rates by 20%. However, your revenue falls.
What does this indicate about the demand for your boutique hotel
rooms?
a) the demand curve for your hotel rooms in vertical
b) boutique hotel rooms are inferior goods
c) demand is inelastic
d) demand is elastic
Question 1) option a)
As TR = P*Q
In %∆ terms, %∆ TR = %∆P + %∆Q
Thus %∆ TR = -8+4 = -4%
Thus TR falls by 4% ,
Question 2) option c
%∆ TR = 12-6 = 6%
Thus total revenue will increase by 6%
Question 3, option B)
By price elasticity of demand, we can check the effect of price changes on TR
Q4) option A)
If demand is unitary elastic , then %∆ in prices equals %∆Q demanded
So %∆ in TR will be zero
Q5) option C)
TR will fall if % increase in quantity demanded is less than % fall in prices , which implies that demand is inelastic.
If an 8% decrease in price leads to a 4% increase in the quantity demanded of...
sticity of demand for its ). What happens to Steven's Soup it increases the price of its canned soup? b. It falls by 162 percent. es by 1.62 percent. d. It rises. reduce your daily rates by 20 percent. However, y at you own a small boutique hotel. In an attempt to raise revenue you this indicate about the demand for your boutique hotel rooms y rates by 20 percent. However, your revenue falls. What does a. The demand curve...
If a 12% increase in price leads to a 4% increase in the quantity demanded of the good, as a result of the price change, the total revenue for this product will ____. a) decrease b) increase c) not change d) fall by half
#14 help! resuit in a quahtity demanded O1 quantity demanded and price change by the same percent as we move along the demand curve. d. c. price will rise by an infinite amount when there is a change in quantity demanded. 14. When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to S70, the quantity demanded of good A falls to 400 units. Using the...
23. Rank the price elasticity of demand from most ed from most elastic to least elastic for the following three Orowing three items: Alcoholiehavares all beer, and Molson Canadian be A Molson canadian beer all beer alcoholic beverages b. All beer, alcoholic beverages Molson Canadian beer C. Alcoholic beverages all beer Molson Canadian beer d. All beer. Molson Canadian beer alcoholic beverages 24. Which of the following could explain why the deman inelastic? wing could explain why the demand for...
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Price Elasticity of Demand: Naturally Good Organics Price Elasticity of Demand measurers how changed in a price affect the quantity of the product demanded. Specifically, it is the ratio of the percentage change in quantity demanded to the percentage change in price. In order to understand how to plan a successful pricing program, marketers must understand how elastic or inelastic the consumers are to changes in price. In other words, to what extent will a price increase or decrease result...
If a 10% increase in the price of beer reduces the quantity demanded by 8%, then demand for beer is Inelastic** elastic unit elastic had increased had decreased The answer is A, but I thought that whenever quantitity demanded changes as a result of price change that makes it Elastic? Please explain!
1) If the quantity demanded of one good increases from 200 to 300 when the price of another good increases from $5 to $7, what is the Cross-Price Elasticity of Demand? a: -.4 b: 1.21 c: -1.21 D: .33 2) If the quantity demanded decreases from 480 to 460 when the price increases from $2 to $2.10, the price elasticity of demand in absolute value is: A: .88, B: 4.3 C: 1.14 D: 1.49 Based on your answer above, demand...
If an increase in income results in a decrease in the quantity demanded of a good then for that good, the a cross-price elasticity of demand is negative b. income elasticity of demand is positive. price elasticity of demand is elastic d income elasticity of demand is negative. 9. if the cross-price elasticity of demand for two goods is 1.25, then a the two goods are luxuries. b. the demand for one of the goods conforms to the law of...
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