Practice Questions
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If the price of a product decreases and its quantity demanded increases significantly, which type of demand does this scenario illustrate?
Elastic demand means that when prices drop, people buy a lot more. Other options are incorrect because Inelastic demand means that price changes don't...
If a product has inelastic demand and its price increases, what is the expected impact on 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...
If the price of a product increases and the quantity demanded decreases to zero, how would this situation be characterized in terms of elasticity?
Perfectly elastic demand means that if the price goes up even a little, people will stop buying it completely. Other options are incorrect because Som...
A company sells a product that has elastic demand. If they increase the price of the product by 10%, what is the likely effect on total revenue, assuming all other factors remain constant?
When demand is elastic, a price increase leads to a bigger drop in sales. Other options are incorrect because Some might think higher prices always me...
A company faces a perfectly elastic demand for its product at a price of $10. If the company raises the price to $12, what will happen to its total revenue?
When demand is perfectly elastic, customers will only buy at the set price. Other options are incorrect because Some might think raising the price wil...
If the price of a product increases by 10% and the price elasticity of demand for that product is -2, what will be the expected percentage change in quantity demanded?
When the price goes up by 10%, the quantity demanded goes down by 20%. Other options are incorrect because This answer suggests that demand changes th...
If the price of a product decreases and the total revenue increases, what can we conclude about the price elasticity of demand for that product?
When the price goes down and revenue goes up, people buy a lot more. Other options are incorrect because Some might think that inelastic means people ...
If a product has inelastic demand, what would happen to its total revenue if the price increases?
When demand is inelastic, people buy about the same amount even if the price goes up. Other options are incorrect because Some might think that higher...
Price elasticity of demand : Total revenue :: Marginal revenue product : ?
Just like price elasticity affects total revenue, marginal revenue product affects total revenue too. Other options are incorrect because Some might t...
In the context of elasticity, when the price of a product decreases, the total revenue will increase if the demand for the product is considered __________.
When demand is elastic, people buy much more of a product if the price drops. Other options are incorrect because Inelastic demand means people buy ab...
How does a decrease in price affect total revenue for a product with elastic demand?
When demand is elastic, people buy much more of a product if the price goes down. Other options are incorrect because Some might think that lowering t...
Arrange the following steps in the correct order to analyze how changes in price affect total revenue using elasticity concepts: A) Identify the price elasticity of demand for the product. B) Calculate the total revenue at the current price. C) Adjust the price and observe the change in quantity demanded. D) Analyze the new total revenue in relation to the elasticity identified.
First, you need to know how sensitive demand is to price changes. Other options are incorrect because This order starts with total revenue instead of ...
A local bakery notices that when they increase the price of their pastries, the total revenue initially rises, but after a certain point, it begins to fall. In this scenario, how can the bakery utilize its understanding of elasticity to make pricing decisions that maximize revenue?
Lowering prices can attract more customers. Other options are incorrect because It's a common mistake to think that higher prices always mean more mon...
If a price increase leads to a decrease in total revenue, what can we infer about the elasticity of 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 inelastic means people always ...
If a firm experiences a decrease in total revenue after lowering the price of its product, what could be the underlying cause?
When demand is elastic, a small price drop leads to a big increase in quantity sold. Other options are incorrect because This suggests that higher cos...
Which scenario best illustrates the concept of inelastic demand?
Inelastic demand means that when prices go up, people still buy almost the same amount. Other options are incorrect because This option shows elastic ...
Which of the following statements about elasticity and revenue are true? (Select all that apply)
Other options are incorrect because Some think that raising prices always means more money; Many believe that higher prices always lead to more money ...
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