Suppose that the price elasticity of demand for an ice cream cone is -1.9 . If the local ice cream shop owner wants to increase total revenue, what would you recommend he or she do?
What will be an ideal response?
The owner should lower the price of ice cream cones. Since demand is elastic, the percentage increase in quantity demanded will be larger than the percentage decrease in price. Therefore, total revenue will rise.
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The idea behind money as a standard of value is that use of money allows:
a. greater efficiency in exchange b. receipt of income to be separated from spending. c. persons to hold spending power for some period of time. d. prices quoted in money terms.
The historical data on velocity shows that velocity for
a. M1 has fallen since 1929 and has become more stable since 1981. b. M1 has risen since 1949 and has become more volatile since 1981. c. both M1 and M2 have increased since 1949 but have become more stable since 1979. d. both M1 and M2 have declined since 1949.