To know if the demand for its product was elastic, unit elastic, or inelastic, a firm could

change price a little bit and observe what happens to TR.

price per unit times quantity sold.

If a decrease in the supply of bottled water results in a decrease in revenue. This means that

demand is elastic in the price range considered.

When demand is elastic, a fall (decrease) in price causes total revenue to rise because

the increase in Q sold can offset the lower price.

When demand is unit elastic, a change in price causes total revenue to stay the same because

the % change in Qd exactly offsets the % change in price.

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#ECON Elasticity and Total Revenue

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An intro to how elasticity of demand relates to total revenue

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Questions 9

Answers

1
If demand is inelastic and you want to increase total revenue, you should increase price
False
True
2
To know if the demand for its product was elastic, unit elastic, or inelastic, a firm could
change price a little bit and observe what happens to TR.
talk to its customers.
do nothing as there is no way to find an elasticity value.
survey competitors on what they feel ED is for the product.
3
Quantity demanded is 50, Quantity supplied is 70, Price is $5. What is total revenue?
$100
$600
$350
$250
4
If Elasticity of demand for sprite is estimated at -1.62 (or 1.6). What happens to TR if the price of sprite rises?
It rises.
It falls by 162 percent.
It rises by 1.62 percent.
It falls
5
Total revenue equals
change in price per unit times quantity sold.
price per unit times quantity sold.
price per unit times quantity supplied.
price per unit times change in quantity sold.
6
If a decrease in the supply of bottled water results in a decrease in revenue. This means that
supply is inelastic in the price range considered.
demand is elastic in the price range considered.
demand is inelastic in the price range considered.
supply is elastic in the price range considered.
7
When demand is elastic, a fall (decrease) in price causes total revenue to rise because
the increase in Q sold can offset the lower price.
the % increase in Qd is less than the % fall in price.
the demand curve shifts.
when price falls, Q sold increases so total revenue rises.
8
If a firm lowered price and found that TR did not change, then the demand for its product is
perfectly inelastic.
unit elastic.
perfectly elastic.
relatively elastic
9
When demand is unit elastic, a change in price causes total revenue to stay the same because
buyers are buying the same quantity.
total revenue never changes with price changes.
the % change in Qd exactly offsets the % change in price.
the change in profit is offset by the change in cost.

#ECON Elasticity and Total Revenue Flashcards | StudBud