Asked by tushig amarjargal on May 10, 2024
Verified
If elasticity of demand is 4 and price is raised,
A) total revenue will fall.
B) total revenue will rise.
C) total revenue will remain constant.
D) there is no way to determine whether total revenue will rise,fall,or remain constant.
Elasticity of Demand
A measure of how responsive the quantity demanded of a good or service is to a change in its price.
Total Revenue
The total income received by a firm from the sale of its goods or services before any costs or expenses are deducted.
- Understand the impact of price elasticity on overall revenue.
Verified Answer
JP
Jesus PachekoMay 14, 2024
Final Answer :
A
Explanation :
If elasticity of demand is 4, it means that a 1% increase in price will lead to a 4% decrease in quantity demanded. Therefore, when the price is raised, the decrease in quantity demanded will be relatively larger, resulting in a decrease in total revenue.
Learning Objectives
- Understand the impact of price elasticity on overall revenue.