Assume that you own a small boutique hotel. In an attempt to raise revenue you reduce your rates by 20 percent. However, your revenue falls. What does this indicate about the demand for your boutique hotel rooms?     The demand curve for your hotel rooms is vertical.     Demand is inelastic.     Boutique hotel rooms are inferior goods.     Demand is elastic.

#4 Determining the price elasticity of demand of a product involves all of the following factors, but NOT the total number of firms in a market.   the availability of substitutes to the product.   whether the product is a luxury or a necessity.

If the price elasticity of demand for gasoline equals 0.3, then qn increase in the price of a gallon of gasoline from $3.70 to $3.90  A) decreases total revenue. B) increases total revenue. C) leads to no change in total revenue. D) makes the demand for gasoline elastic. E) Both answers B and D are correct.

Question 18.18.   You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1.  To increase total revenues, you should:         increase the price of the software.        decrease the price of the software.        hold the price of the software constant.        increase the supply of the software. Question 19.19.   A state government wants to increase the taxes on cigarettes to increase tax revenue.  This tax would only be effective in raising new tax revenues if the price elasticity of demand is  unity.        elastic.        inelastic.        perfectly elastic. Question 20.20.   Movie theaters charge lower prices to see a movie in the afternoon than in the evening because there is an  inelastic supply of movies in the evening.        elastic demand to see movies in the evening.        elastic demand to see movies in the afternoon.        inelastic demand to see movies in the afternoon.

Price P₁ Q A B U Q₁ Quantity Multiple Choice Q₂ Demand In the accompanying diagram, if price is reduced from P₁ to P2, total revenue will Increase by C-A. Increase by A - C. decrease by C-A. decrease by A - C.

Your economist friend told you that because of the change in demand described in part (c), price elasticity of demand changed. Is your friend right? Explain.

Suppose that the price of product X rises by 12 percent and the quantity supplied of X increases by 15 percent. The coefficient of price elasticity of supply for good X is   Multiple Choice   negative, and therefore X is an inferior good.   positive, and therefore X is a normal good.   more than 1, and therefore supply is elastic.   less than 1, and therefore supply is inelastic.

Suppose the own price elasticity of demand for good X is −2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is −6. Determine how much the consumption of this good will change if:Instructions: Enter your responses as percentages. If you are entering a negative number, be sure to use a (−) sign.a. The price of good X decreases by 5 percent. percentb. The price of good Y increases by 10 percent. percentc. Advertising decreases by 2 percent. percentd. Income increases by 3 percent.  percent

Total revenue is $25,000 if price is $10, but when price increases to $12, total revenue falls to $24,000. Use the midpoint formula to calculate the price elasticity of demand between $10 and $12. (keep your answer positive and keep 2 decimal point if applicable)

A firm estimates its price elasticity of demand for poutine to be -2 and its elasticity of demand with respect to advertising to be 0.1. The firm currently charges $10 and sells 10,000 units. What will lead to a larger increase in revenue: a $2 drop in price (while keeping advertising constant) or doubling the amount of advertising (while keeping the price constant)?