If the Price Elasticity of Demand (PED) 1then Price should be decrea...

If the Price Elasticity of Demand (PED) = 1 thenâ€¦ Price should be decreased to maximize revenue. Price...

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Economics

If the Price Elasticity of Demand (PED) = 1thenâ€¦
Price should be decreased to maximize revenue.
Price should be increased to maximize revenue.
Revenue is at its maximum.
Profit is at its maximum.
If the demand for good X shifts to the right as theprice of good Y rises, then goods X and Y are:
Inferior goods.
Complementary goods.
Normal goods.
Substitute goods.
Which of the following is not a determinant ofPrice Elasticity of Demand (PED)?
The availability of close substitutes.
Time horizon: the passage of time.
The proportion of income spent on the good.
The preferences of sellers.
The concepts of Utility and Marginal Utility are onlyapplicable for:
Markets for two goods.
All the consumers of one good or service
An individual consumer or household.
None of the above.
An explicit cost is â€¦
A variable cost that increases with quantity.
A fixed cost that does not increase with quantity.
A cost that involves spending money.
The same as an opportunity cost.

Answer & Explanation Solved by verified expert

3.7 Ratings (529 Votes)

1 PED 1 implies that Revenue is maximum PED1 occurs at themiddle of demand curve where MR0 and beyond that level MR becomesnegative This eats into the Total Revenue And at a point beforethat PED1 that is customers react positively to pricereduction and sales increase the revenue Thus TR maximises wherePED1Hence c is the correct answer2 If the demand for good X shifts to the right when price of Yincreases then the goods are Substitute Goods This means thatwhen X has See Answer

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