1.If the brewer of Dominion Ale raises the price of its ale from $6.99 per six-pack...
1.If the brewer of Dominion Ale raises the price of its ale from $6.99 per six-pack to $7.99 per six-pack and discovers that, as a result, revenues on the sale of its ale fell,
A.the demand for Dominion Ale over the price-change range $6.99-$7.99 is elastic
b.the demand for Dominion Ale over the price-change range $6.99-$7.99 is inelastic
c.the supply of Dominion Ale over the price-change range $6.99-$7.99 is elastic
d.the supply of Dominion Ale over the price-change range $6.99-$7.99 is inelastic
Homework Answers
When total revenue from the sale of a good increases as its price is increased or decreases as its price is decreased then demand for such good is said to be inelastic.
On the other hand, when total revenue from the sale of a good decreases as its price is increased or increases as its price is decreased then demand for such good is said to be elastic.
In the given case, the price of Dominion Ale is increased from $6.99 per six-pack to $7.99 per six-pack and due to this price increase the total revenue declined.
As with increase in price, total revenue is decreasing, it can be stated that demand for Dominion Ale over the price-change range $6.99-$7.99 is elastic.
Hence, the correct answer is the option (A).
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