Asked by Jennifer Feliz on Jun 28, 2024
Verified
If price changes and total revenue changes in the opposite direction, demand is relatively elastic.
Total Revenue
The total amount of money generated by a company or entity from its business activities, such as sales of goods or services, before any expenses are subtracted.
Opposite Direction
A concept reflecting movement, tendency, or orientation diametrically different from a reference point or direction.
Relatively Elastic
Describes a supply or demand curve in economics that shows a greater sensitivity or responsiveness to changes in price.
- Develop an appreciation for the theory of price elasticity of demand and the methodology applied in its calculation.
- Evaluate the relationship between price elasticity, changes in price levels, and the aggregate revenue.
Verified Answer
XZ
XIAOYIN ZHANGJun 30, 2024
Final Answer :
True
Explanation :
When demand is relatively elastic, a price increase leads to a larger percentage decrease in quantity demanded, causing total revenue to decrease, and vice versa for a price decrease.
Learning Objectives
- Develop an appreciation for the theory of price elasticity of demand and the methodology applied in its calculation.
- Evaluate the relationship between price elasticity, changes in price levels, and the aggregate revenue.