Suppose the price elasticity of demand for fishing lures equals 1.5 in South Carolina and 0.63...
Suppose the price elasticity of demand for fishing lures equals 1.5 in South Carolina and 0.63 in Alabama. To increase revenue, fishing lure manufacturers should:
|
a |
lower prices in South Carolina and raise prices in Alabama. |
|
b |
raise prices in each state. |
|
c |
lower prices in each state. |
|
d |
leave prices unchanged in South Carolina and raise prices in Alabama. |
Homework Answers
If price Ed is elastic (1.5), then with decrease in the price will lead to TR will increase.
If price Ed is elastic (0.63), then with increase in the price will lead to TR will increase.
Hence it can be said that if the price elasticity of demand for fishing lures equals 1.5 in South Carolina and 0.63 in Alabama. To increase revenue, fishing lure manufacturers should lower prices in South Carolina and raise prices in Alabama.
Hence option a is the correct answer.
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Suppose the price elasticity of demand for fishing lures equals
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