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An increase in price will result in an increase in total revenue if :
- a)the percentage change in quantity demanded is less than the percentage change in price.
- b)the percentage change in quantity demanded is greater than the percentage change in price.
- c)demand is elastic.
- d)the consumer is operating along a linear demand curve at a point at which the price is very high and the quantity demanded is very low.
Correct answer is option 'A'. Can you explain this answer?
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An increase in price will result in an increase in total revenue if :a...
Explanation:
When the price of a product increases, the total revenue generated by the seller may increase or decrease depending on the responsiveness of the quantity demanded to the price change. In other words, it depends on the elasticity of demand.
Elasticity of demand is the degree of responsiveness of quantity demanded to a change in price. If a small change in price results in a large change in quantity demanded, then demand is said to be elastic. If a change in price results in a small change in quantity demanded, then demand is said to be inelastic.
In this case, an increase in price will result in an increase in total revenue if the percentage change in quantity demanded is less than the percentage change in price. This means that demand is inelastic, and the increase in price does not significantly reduce the quantity demanded. As a result, the seller can increase the price and still generate more revenue.
For example, if the price of a medicine is increased by 10%, and the quantity demanded decreases by only 2%, then demand is inelastic and the total revenue generated by the seller will increase.
Hence, option A is the correct answer.
When the price of a product increases, the total revenue generated by the seller may increase or decrease depending on the responsiveness of the quantity demanded to the price change. In other words, it depends on the elasticity of demand.
Elasticity of demand is the degree of responsiveness of quantity demanded to a change in price. If a small change in price results in a large change in quantity demanded, then demand is said to be elastic. If a change in price results in a small change in quantity demanded, then demand is said to be inelastic.
In this case, an increase in price will result in an increase in total revenue if the percentage change in quantity demanded is less than the percentage change in price. This means that demand is inelastic, and the increase in price does not significantly reduce the quantity demanded. As a result, the seller can increase the price and still generate more revenue.
For example, if the price of a medicine is increased by 10%, and the quantity demanded decreases by only 2%, then demand is inelastic and the total revenue generated by the seller will increase.
Hence, option A is the correct answer.
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An increase in price will result in an increase in total revenue if :a...
An increase in price will result in increase in total revenue when the demand is inelastic. When the demand is inelastic, the percentage change in quantity demanded is less than the percentage change in price
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An increase in price will result in an increase in total revenue if :a)the percentage change in quantity demanded is less than the percentage change in price.b)the percentage change in quantity demanded is greater than the percentage change in price.c)demand is elastic.d)the consumer is operating along a linear demand curve at a point at which the price is very high and the quantity demanded is very low.Correct answer is option 'A'. Can you explain this answer?
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