If a producer wants to increase revenue and knows that the good it is selling is...

Question

Question

If a producer wants to increase revenue and knows that the good it is selling is...

If a producer wants to increase revenue and knows that the good it is selling is an inelastic good, which of the following should it do?

Select one:

a. increase price of the good

b. decrease price of the good

c. keep the price the same

d. need more information to answer the question

business economics

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Option A

Inelastic goods are those goods whose price change will have little or no change in the quantity demanded of that good.

Which means that graphically we represent the demand curve for an inelastic good as a vertical line as the quantity demanded remains same irrespective of the price level.

The demand of a good is said to be inelastic if an increase in the price causes the total revenue to increase.
If the price of the inelastic good is increased, the total revenue Increases but this will lead to a small decrease in the quantity demanded.

Add a comment

Answer 2

Similar Homework Help Questions

If a producer wants to increase revenue and knows that the good it is selling is...

If a producer wants to increase revenue and knows that the good it is selling is an inelastic good, which of the following should it do?
if the price elasticity of demand is -0.5, decreasing price will a. increase revenue b. keep...

if the price elasticity of demand is -0.5, decreasing price will a. increase revenue b. keep revenue the same c. decrease revenue d. cannot be determined without more information
Which of the following would cause an increase in the demand for good X (an inferior...

Which of the following would cause an increase in the demand for good X (an inferior good)? an increase in the price of good Y which is a complement to good X a decrease in the number of consumers an expectation of a lower price for good X a decrease in income a decrease in the price of good Z which is a substitute for good X In response the Covid-19 pandemic, many people want to purchase hand sanitizer. Simultaneously,...

Revenue at a major smartphone manufacturer was $1.5 billion for the nine months ending March 2,...

Revenue at a major smartphone manufacturer was $1.5 billion for the nine months ending March 2, up 98 percent over revenues for the same period last year. Management attributes the increase in revenues to a 124 percent increase in shipments, despite a 17 percent drop in the average blended selling price of its line of phones. Given this information, is it surprising that the company’s revenue increased when it decreased the average selling price of its phones? Yes. Own price...
If an increase in income results in a decrease in the quantity demanded of a good then for that good, the a cross-p...

If an increase in income results in a decrease in the quantity demanded of a good then for that good, the a cross-price elasticity of demand is negative b. income elasticity of demand is positive. price elasticity of demand is elastic d income elasticity of demand is negative. 9. if the cross-price elasticity of demand for two goods is 1.25, then a the two goods are luxuries. b. the demand for one of the goods conforms to the law of...
If the government imposes a limit on sales of a good or service by licensing the...

If the government imposes a limit on sales of a good or service by licensing the right to sell a given quantity of the good, the difference between the demand and supply price is Select one: A the quota rent B. the equilibrium price. O C. the quota price D. deadweight loss Next page If the opportunity cost of manufacturing machinery is lower in Canada than in Britain and the opportunity cost of manufacturing sweaters is higher in Canada than...

QUESTION 36 If the demand for a good is price inelastic and the good price is...

QUESTION 36 If the demand for a good is price inelastic and the good price is increased, then the marginal revenue (MR) received by the seller will not change. decrease. increase. Can't be determined from this information. QUESTION 37 If the income elasticity of a particular good is negative 0.2, it would be considered a superior good. Oa normal good. O an inferior good. an elastic good.
For a normal good, an increase in consumer income will cause the market demand for the...

For a normal good, an increase in consumer income will cause the market demand for the product to: decrease, which is a shift to the left of the demand curve. decrease, which is a shift to the right of the demand curve. increase, which is a shift to the right of the demand curve. increase, which is a shift to the left of the demand curve. Producer surplus is the: amount by which the quantity supplied of a good exceeds...
Please answer questions 2,3,4 QUESTION 2 Suppose a producer is able to separate customers into two...

Please answer questions 2,3,4 QUESTION 2 Suppose a producer is able to separate customers into two groups, one having an inelastic demand and the other having an elastic demand. if the producer's objective is to increase total revenue, she should O 1 increase the price for both groups of customers O2 decrease the price charged to customers with the elastic demand and increase the price charged to customers with the inelastic demand O3.decrease the price to both groups of customers...

please answer ,question 8,9,10,11,12. 8. When the percentage change in price is greater than the resulting...

please answer ,question 8,9,10,11,12. 8. When the percentage change in price is greater than the resulting percentage change in quantity demanded A) a decrease in price will increase total revenue B) demand may be either elastic or inelastic. C) an increase in price will increase total revenue. D) demand is elastic. 9. Suppose the price elasticity coefficients of demand are 1.43, 0.67, 1.11, and 0.29 for products W, X, Y, and Z respectively. A 1 percent decrease in price will...

If a producer wants to increase revenue and knows that the good it is selling is...

Homework Answers

Add Answer to:
If a producer wants to increase revenue and knows that the good it is selling is...

Post as a guest

Earn Coins