To check:
If the
Explanation of Solution
The price of home heating oil increased by 20 percent and the quantity demanded decreased by 2 percent. This shows that the increased price of home heating oil did not create any drastic change in the quantity demanded.Thus, it has an
In conclusion, the total revenue test could be executed easily and with a glance,we can find whether the product or service is inelastic or elastic, if the required percentage is available.
Total revenue test: It is used to determine whether a product or service has an elastic or inelastic demand.When increase in price increases the total revenue, then the demand is said to be inelastic.
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Chapter 5 Solutions
Foundations of Economics (8th Edition)
- What does a price elasticity of demand of 0.39 mean?arrow_forwardProve that price elasticity of demand is not the same as the slope of a demand curve.arrow_forwardThe price elasticity of demand for a product is unitary elastic. At a price of $30, 100 units of the product are sold. If the price is increased to $50, then one would expect sales to equal: Group of answer choices 120 80 150 100 60arrow_forward
- Calculate price elasticity of supply using the mid-point method.arrow_forwardIf the price elasticity of demand is 5.0 then a 10 percent increase in the price results in a decrease in quantity demanded.arrow_forwardThe price elasticity of supply measures the response of sellers to change in the price of a product. True/ Falsearrow_forward
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning