Practice Questions
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If the price of a substitute good increases, what is the likely effect on the total revenue of a product with positive cross-price elasticity of demand?
When a substitute's price goes up, people buy more of the other product. Other options are incorrect because Some might think that higher prices lead ...
If a firm experiences inelastic demand for its product and decides to increase its price, what is likely to happen to its total revenue?
When demand is inelastic, people still buy the product even if the price goes up. Other options are incorrect because Some might think that higher pri...
How does a decrease in price affect total revenue when demand is elastic?
When demand is elastic, people buy much more if the price goes down. Other options are incorrect because Some might think lowering the price always me...
If a company increases the price of its product and observes an increase in total revenue, what can be inferred about the price elasticity of demand for that product?
When demand is inelastic, people still buy the product even if the price goes up. Other options are incorrect because Some might think that if people ...
If a product's price decreases and the total revenue increases, what can be inferred about the price elasticity of demand for that product?
When the price goes down and people buy more, it shows that demand is elastic. Other options are incorrect because Some might think inelastic means pe...
If a product's demand is elastic, what is the expected effect on total revenue if the price of the product is decreased?
When demand is elastic, people buy much more of the product if the price goes down. Other options are incorrect because Some might think lowering the ...
If the price of a product increases and total revenue decreases, what does this indicate about the demand elasticity of that product?
When the price goes up and people buy less, it shows they are sensitive to price changes. Other options are incorrect because Some might think that in...
If the price of a product decreases and the total revenue increases, what can be concluded about the price elasticity of demand for that product?
When the price goes down and people buy much more, demand is elastic. Other options are incorrect because Some might think that inelastic means people...
If Total Revenue is to Demand Elasticity as a business strategy is to __________?
Pricing adjustments are important for a business strategy. Other options are incorrect because Some might think consumer behavior is the main focus; P...
A company increases the price of its product from $10 to $12 and observes that total revenue decreases from $100,000 to $90,000. How should the company classify the demand for its product based on this observation?
When the price went up, the total money made went down. Other options are incorrect because Some might think that if the price goes up, people will st...
Arrange the following steps in the correct order to analyze how a price change affects total revenue based on demand elasticity: A) Identify the price change and the corresponding quantity demanded B) Determine if the demand is elastic or inelastic C) Calculate the new total revenue D) Analyze the impact of the elasticity on total revenue
First, you need to identify the price change and how much people want to buy at that new price. Other options are incorrect because This option starts...
A local coffee shop raises the price of its lattes from $4 to $5. After the price increase, they notice that their total revenue has decreased. What can be inferred about the demand for lattes at this price range?
When the price goes up and sales go down, it means people are sensitive to price changes. Other options are incorrect because This answer suggests tha...
When the price of a product decreases and total revenue increases, the demand for that product is considered to be __________.
When the price goes down and people buy more, demand is elastic. Other options are incorrect because Some might think inelastic means people always bu...
Which of the following statements correctly describe the relationship between total revenue and demand elasticity? Select all that apply.
All options misunderstand how price changes affect total revenue based on demand elasticity. Other options are incorrect because This option suggests ...
If a company raises its price and total revenue decreases, what can be inferred about the demand for its product?
When demand is elastic, people buy less if the price goes up. Other options are incorrect because Some might think inelastic means people always buy t...
If a company raises its prices and total revenue decreases, what can we infer about the demand for its product?
When demand is elastic, people buy less if the price goes up. Other options are incorrect because Some might think that if demand is perfectly inelast...
If a company increases the price of its product and observes a decrease in total revenue, what can be inferred about the demand for that product?
When demand is elastic, people buy much less if the price goes up. Other options are incorrect because Some might think that inelastic demand means pe...
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