1.An increase in the price of a good will 2.An increase in the price of a good w
ID: 1140097 • Letter: 1
Question
1.An increase in the price of a good will
2.An increase in the price of a good will
3.An increase in price causes an increase in total revenue when demand is
4.Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?
5.Other things equal, when the price of a good falls, the
a. increase demand. b. decrease demand. c. increase quantity demanded. d. decrease quantity demanded.2.An increase in the price of a good will
a. increase supply. b. decrease supply. c. increase quantity supplied. d. decrease quantity supplied.3.An increase in price causes an increase in total revenue when demand is
a. elastic. b. inelastic. c. unit elastic. d. All of the above are possible4.Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue?
a. 0.6 b. 0.9 c. 1 d. 2.65.Other things equal, when the price of a good falls, the
a. quantity supplied of the good increases. b. supply decreases. c. quantity supplied of the good decreases. d. demand increases.Explanation / Answer
1. Ans: decrease quantity demanded.
Explanation:
A change in price will lead to a change in quantity demanded, where as a change in the factors other than price will lead to a change in demand. Therefore, an increase in the price of a good will decrease quantity demanded. So, option [d] is correct answer.
2. Ans: increase quantity supplied.
Explanation:
A change in price will lead to a change in quantity supplied, where as a change in the factors other than price will lead to a change in supply. Therefore, an increase in the price of a good will increase quantity supplieded. So, option [c] is correct answer.
3. Ans: inelastic.
Explanation:
When demand is inelastic, an increase in price of a good does not have much impact on the quantity demanded. In other words, quantity demanded would not fall much when price of a good increase. Therefore, an increase in price of a good leads to an increase in total revenue when demand is elastic. So, option [b] is correct answer.
4. Ans: 2.6
Explanation:
An increase in price would decrease revenue, when demad for the good is elastic. When PED is greater than 1, we can say demand is elastic. Since, 2.6 is greater than 1, therefore, option [d] is correct answer.
5. Ans: quantity supplied of the good decreases.
Explanation:
Law of supply states that, Other things equal, when the price of a good falls, the quantity supplied of the good decreases. In other wards, there is a direct relationship between price of a good and its quantity supplied. So, option [c] is correct answer.
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