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17 February, 06:30

5. When a product price is elastic does a drop in price result in

an increase or decrease in earnings?

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Answers (1)
  1. 17 February, 07:04
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    Answer: Change in the market What happens to total revenue?

    Ped is unit elastic (=1) and a firm raises price Total revenue remains the same

    Ped is - 1.5 (elastic) and the firm raises price by 4% Total revenue decreases

    Ped is - 0.4 (inelastic) and the firm raises price by 30% Total revenue increases
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