Microeconomics
Solutions
Microeconomics
Identify what happens to total revenue as a result of each of the following:
- a. Price rises and demand is elastic.
- b. Price falls and demand is inelastic.
- c. Price rises and demand is unit elastic.
- d. Price rises and demand is inelastic.
- e. Price falls and demand is elastic.
Identify the change in total revenue in different circumstances.
Option a:
An elastic demand will inversely change as per the changes in price. Thus, if the demand is elastic, a rise in price causes to decline the demand of a commodity. As a result, the total revenue will fall.
Option b:
If a commodity has inelastic demand, then it does not increase or decrease, respectively with the fall or rise in its price. Thus, if the demand is inelastic, a fall in price does not affect the demand of a commodity. As a result, the total revenue will fall.
Option c:
The unit elastic demand is the situation in which the percentage change in price is the same as the change in quantity demanded...
Chapter 6 Solutions
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