Introduction to Economics 1 Deneme Sınavı Sorusu #1275467
In the case of unit elastic demand, how does an increase in price change the revenue and why?
|
Total revenue increases because the increase in revenue from higher price is larger than the decrease in revenue due to lower quantity. |
|
Total revenue does not change because the increase in the total revenue from higher price exactly offsets the reduction of the total revenue due to lower quantity. |
|
Total revenue increases because the higher price causes the revenue to increase and it does not have an effect on the quantity, as the demand is unit elastic. |
|
Total revenue decreases because the increase in revenue caused by higher price is smaller than the decrease in revenue due to lower quantity. |
|
The result is ambiguous because we can not precisely know if the increase in revenue due to higher price is larger, smaller or equal to the decrease in revenue due to lower quantity. |
In the case of unit elastic demand, which is the case of mid-point of linear demand curve, an increase in price leaves total revenue unchanged: the increase in the total revenue from higher Price exactly offsets the reduction of the total revenue due to lower Quantity.
Yorumlar
- 0 Yorum