Suppose that when the price of ginger ale is $2 per bottle, firms can sell 4 million bottles. When the price of ginger ale is $3 per bottle, firms can sell 2 million bottles. Which of the following statements is true?
a. The demand for ginger ale is income inelastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
b. The demand for ginger ale is income elastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
c. The demand for ginger ale is price inelastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
d. The demand for ginger ale is price elastic, so an increase in the price of ginger ale will decrease the total revenue of ginger ale producers.
d
You might also like to view...
Economists speak of price elasticity of demand. Which word below is synonymous with "elasticity"?
A) Futility B) Sensitivity C) Relativity D) Serendipity
More cattle are found to have mad cow disease. As a result, consumer confidence in the safety of beef is shaken. What would an economist predict will happen in the beef market?
A) As consumer preferences move away from beef, there is an upward movement along the beef demand curve. B) The demand curve will shift to the left. C) The demand curve does not shift but consumers move to a point lower down the curve. D) absolutely no change in either the quantity demand or the demand for beef
Social Security payments were:
A. originally adjusted for inflation, causing the real value to retirees to decrease over time. B. originally adjusted for inflation, causing the real value to retirees to increase over time. C. not originally adjusted for inflation, causing the real value to retirees to increase over time. D. not originally adjusted for inflation, causing the real value to retirees to decrease over time.
There is essentially no risk of default for U.S. government securities
a. True b. False Indicate whether the statement is true or false