anonymous
  • anonymous
If a firm raises the pirce of a product with elastic demand, what wiill happen to the total revenue? Question 23 options: It increases It decreases A change in an area other than price A change in price and availability
Economics - Financial Markets
chestercat
  • chestercat
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anonymous
  • anonymous
Elastic refers to the fact that the market for that product will drastically change with price changes. The demand would decrease in this case therefore reducing revenue. I believe.
anonymous
  • anonymous
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anonymous
  • anonymous
The question told us we are in the elastic portion of the demand curve, so we know revenue will fall. This is equivalent to example A.

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anonymous
  • anonymous
Example A shows a price increase along the elastic portion of the demand curve. Example B shows a price increase along the inelastic portion of the demand curve.

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