a)
Whether the
a)
Explanation of Solution
As consumers are responsive to
Introduction:
b)
Whether the demand is elastic, inelastic, or unit elastic when the price falls, the additional revenue generated by the increase in quantity sold is offset by the revenue lost from the fall in the price received per unit.
b)
Explanation of Solution
The demand would be unit-elastic where additional revenue is generated by the increase in quantity sold offset by the revenue lost from the fall in the price received per unit because the loss in revenue with the fall in price is equal to the revenue gained by more sales.
Introduction: Elasticity of demand represents the measure of the sensitivity of demand to the price that shows how a change in price or supply of goods affects the quantity demanded.
c)
Whether the demand is elastic, inelastic, or unit elastic where total revenue decreases when output increases.
c)
Explanation of Solution
There would be
Introduction: Elasticity of demand represents the measure of the sensitivity of demand to the price that shows how a change in price or supply of goods affects the quantity demanded.
d)
Whether the demand is elastic, inelastic, or unit elastic when producers find an increase in total revenue by working together to reduce industry output.
d)
Explanation of Solution
The demand is inelastic when producers find an increase in total revenue by working together to reduce industrial output because consumers are likely unresponsive to any change in price.
Introduction: Elasticity of demand represents the measure of the sensitivity of demand to the price that shows how a change in price or supply of goods affects the quantity demanded.
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Chapter 47 Solutions
Krugman's Economics For The Ap® Course
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