Soru
One winter recently, the price of antique furniture increased by 20 percent and the quantity demanded decreased by 30 percer Use the total revenue test to determine whether the demand for antique furniture is elastic or inelastiC. Total revenue __ because the percentage increase in the price is __ than the percentage decrease in the quantity demanded. A. does not change less B. increases; greater C. decreases; less D. decreases; greater E. increases; less
Çözüm
4.3
(310 Oylar)
Janset
Elit · 8 yıl öğretmeni
Uzman doğrulaması
Cevap
B. increases; greater
Daha Fazla
## Step 1The total revenue test is a method used to determine whether the demand for a product is elastic or inelastic. This test involves comparing the percentage change in price to the percentage change in quantity demanded.## Step 2In this case, the price of antique furniture increased by 20 percent and the quantity demanded decreased by 30 percent. ## Step 3The total revenue is calculated by multiplying the price by the quantity. If the total revenue increases, it means that the percentage increase in price is greater than the percentage decrease in quantity demanded. This indicates that the demand is inelastic.## Step 4On the other hand, if the total revenue decreases, it means that the percentage increase in price is less than the percentage decrease in quantity demanded. This indicates that the demand is elastic.## Step 5In this case, the total revenue increases because the percentage increase in price is greater than the percentage decrease in quantity demanded. This indicates that the demand for antique furniture is inelastic.