Asked by Gavin VandenTop on May 10, 2024
Verified
The price-elasticity coefficients are 2.6, 0.5, 1.4, and 0.18 for four different demand schedules,D₁, D₂, D₃, and D₄, respectively. A 2-percent increase in price will result in an increase in total revenues in which of the following cases?
A) D₁ and D₃
B) D₁ and D₄
C) D₂ and D₄
D) D₁, D₂, and D₃
Price-Elasticity Coefficients
Numerical values that measure the responsiveness of quantity demanded or supplied to a change in price; they help in assessing how price changes impact demand or supply levels.
Demand Schedules
A table that shows the quantity of a good or service that consumers are willing and able to purchase at various prices during a specified period.
- Apprehend the concept of price elasticity of demand along with the approach for calculating it.
- Identify the implications of elasticity for revenue and pricing strategies.
Verified Answer
AR
ashley RiveraMay 14, 2024
Final Answer :
C
Explanation :
For products with inelastic demand (price elasticity coefficient less than 1), an increase in price leads to an increase in total revenue. This applies to D₂ (0.5) and D₄ (0.18).
Learning Objectives
- Apprehend the concept of price elasticity of demand along with the approach for calculating it.
- Identify the implications of elasticity for revenue and pricing strategies.