ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A
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B
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C
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D
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Detailed explanation-1: -This means the percentage change in quantity demanded equals the percentage change in price. So, price changes will not alter the revenue.
Detailed explanation-2: -Elastic demand will mean that when price falls, demand will increase by a greater percentage than the price decreased. This means an increase in revenue. Inelastic demand will mean that when price increases, demand will fall by a smaller percentage than the price increased.
Detailed explanation-3: -If price and quantity demanded change by the same percentage (i.e., if demand is unit price elastic), then total revenue does not change.
Detailed explanation-4: -The price elasticity of a product describes how sensitive suppliers and buyers are to changes in price. It doesn’t change in relation to supply and demand, but it defines the slope of each curve. A product with high price elasticity of demand will see demand fall sharply when prices rise.
Detailed explanation-5: -The changes in total revenue are based on the price elasticity of demand, and there are general rules for them: Price and total revenue have a positive relationship when demand is inelastic (price elasticity < 1), which means that when price increases, total revenue will increase too.