Asked by Amie Waelty on Jul 26, 2024
Verified
Related to the Economics in Practice on page 102: Harriet runs a corner delicatessen and one day decides to raise her prices by 20 percent. Total revenue is likely to ________ when she first raises prices since demand is relatively ________ in the short term.
A) rise; inelastic
B) fall; inelastic
C) rise; elastic
D) fall; elastic
Elastic Demand
A situation where the quantity demanded of a good or service significantly changes in response to a change in price.
Total Revenue
The total amount of money generated by the sale of goods or services, calculated as the unit price multiplied by the quantity sold.
Delicatessen
A store or section of a grocery store selling cured meats, cheese, and other specialty food items.
- Examine the impact of variations in price on overall revenue in relation to demand elasticity.
- Comprehend the reasons behind the increased elasticity of demand over a long-term period compared to a short-term period.
Verified Answer
AK
Ahmad KarimehJul 28, 2024
Final Answer :
A
Explanation :
Total revenue is likely to rise when prices are increased if the demand is inelastic in the short term, meaning consumers' purchasing behavior does not change significantly with a price increase.
Learning Objectives
- Examine the impact of variations in price on overall revenue in relation to demand elasticity.
- Comprehend the reasons behind the increased elasticity of demand over a long-term period compared to a short-term period.