To check:
If the demand for home heating oil is elastic or inelastic using the total revenuetest.
Explanation of Solution
The price of home heating oil increased by 20 percent and the quantity demanded decreased by 2 percent. This shows that the increased price of home heating oil did not create any drastic change in the quantity demanded.Thus, it has an
In conclusion, the total revenue test could be executed easily and with a glance,we can find whether the product or service is inelastic or elastic, if the required percentage is available.
Total revenue test: It is used to determine whether a product or service has an elastic or inelastic demand.When increase in price increases the total revenue, then the demand is said to be inelastic.
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Foundations of Economics - With MyEconLab
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