The marketing people at Ben and Jerry's Ice Cream Company believe that if they lower the price of their Cherry Garcia flavor ice cream by 25 percent, the quantity demanded will increase by 5 percent. If they are correct in their belief, then
A) the demand for Cherry Garcia is price elastic.
B) their total revenue from Cherry Garcia will increase if they lower the price.
C) the demand for Cherry Garcia is income elastic.
D) their total revenue from Cherry Garcia will decrease if they lower the price.
D
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Which of the following factors does not explain the inverse relationship between the price level and the total demand for output?
A. An interest-rate effect B. A foreign-purchases effect C. A real-balances effect D. A substitution effect
What roles do central banks play in an economy?
A) Central banks are government depositories. B) Central banks lobby for regulation on behalf of the banking industry. C) Central banks monitor fiscal agents in the economy. D) none of the above
“The higher real wages earned by American workers primarily reflect the fact that Americans have a greater inherent ability to produce goods and services than do foreign workers.” Evaluate
What will be an ideal response?
________ is caused by the fact that taxes distort economic decisions.
A. Excess burden B. Neutrality C. Market failure D. Tax shifting