Asked by
Gilberto Ysaccis
on Dec 19, 2024
Verified
A manufacturer of frozen pizzas found that total revenue decreased when price was lowered from $5 to $4. It was also found that total revenue decreased when price was raised from $5 to $6. Thus,
A) the demand for pizza is elastic above $5 and inelastic below $5.
B) the demand for pizza is elastic both above and below $5.
C) the demand for pizza is inelastic above $5 and elastic below $5.
D) $5 is not the equilibrium price of pizza.
Total Revenue
The sum of money a company earns from selling products or providing services in a specific time frame.
Elastic
Describes a situation where the quantity demanded or supplied of a good or service is highly responsive to changes in its price.
Inelastic
Characterizes a situation where the demand for a product is not significantly affected by changes in price.
- Explore the linkage between elasticity and complete income generation.
- Comprehend how changes in elasticity affect the total revenue of firms when prices fluctuate.
Verified Answer
SO
Learning Objectives
- Explore the linkage between elasticity and complete income generation.
- Comprehend how changes in elasticity affect the total revenue of firms when prices fluctuate.