The demand elasticities for Pepsi and tacos are -0.45 and -1.34 respectively. Therefore, if the price...
The demand elasticities for Pepsi and tacos are -0.45 and -1.34 respectively. Therefore, if the price of both products increases, ceteris paribus, the total revenue of Pepsi producers will ________ and the total revenue of taco producers will ________. Select one: a. increase; increase b. increase; decrease c. decrease; increase d. decrease; decrease
Homework Answers
The relation between elasticity and total revenue:
If e<1: Total revenue will fall
If e=1: Total revenue will be maximum
If e>1: Total revenue will rise
Therefore, if the price of pepsi rises, the total revenue from pepsi decreases (because e<1)
And if the price of tacos rises, the total revenue from tacos will increase (because e>1)
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The demand elasticities for Pepsi and tacos are -0.45 and -1.34
respectively. Therefore, if the price...
Concept: Derive Individual Demand Curve Barry consumes tacos and pepsi. The price of tacos is initially...
Concept: Derive Individual Demand Curve Barry consumes tacos and pepsi. The price of tacos is initially $2.00 per taco and the price of pepsi is $2.00 per can and Barry has $16.00 to spend. The marginal utility that each good yields is illustrated in the table below, along with the marginal utility per dollar spent on each good at these prices 10 MU Tacos MUT PT Pepsi MUp PP 1 10 5 1 10 5 MU What is Barry's demand...
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Concept: Derive Individual Demand Curve Barry consumes tacos and pepsi. The price of tacos is initially $2.00 per taco and the price of pepsi is $2.00 per can and Barry has $16.00 to spend. The marginal utility that each good yields is illustrated in the table below, along with the marginal utility per dollar spent on each good at these prices 10 MU Tacos MUT PT Pepsi MUp PP 1 10 5 1 10 5 MU What is Barry's demand...
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