Economics quiz chapter 5, pt 2

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Which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?

0.3

Refer to Figure 5-5. At a price of $50 per unit, sellers' total revenue equals

1250

Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals

450

A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct?

The mayor would be correct if demand were price inelastic; the city manager would be correct if demand were price elastic.

When demand is inelastic, a decrease in price will cause

a decrease in total revenue

Refer to Figure 5-10. If rectangle D is larger than rectangle A, then

all the above are correct

Get Smart University is contemplating an increase in tuition to enhance revenue. If GSU feels that raising tuition would enhance revenue, it is

assuming that the demand for university education is inelastic.

Refer to Figure 5-9. If the price falls from point A to point B, total revenue

increases, and demand is price elastic.

Refer to Figure 5-9. If the price rises from point D to point C, total revenue

increases, and demand is price inelastic.

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.


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