Question

Suppose when the price of HDTV decreased by 10 percent, the quantity supplied decreased by 18...

Suppose when the price of HDTV decreased by 10 percent, the quantity supplied decreased by 18 percent. Based on this information, determine what happens to the revenue received by suppliers.

A. Revenue increases because supply is elastic

B. Revenue decreases because supply is inelastic

C. Revenue increases because price increases

D. We cannot determine what happens to revenue based on information about the price elasticity of supply

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Homework Answers

Answer #1

Can you increase or decrease depends on the price elasticity of demand and here price elasticity of supply can be determined because quantity supply change and price changes given where quantity demanded change is not given and that is the reason why you cannot determine the change in revenue.

where is the demand is elastic decrease in price increases the revenue and if the demand is inelastic decrease in price decreases the revenue

Therefore( D) is the answer

Because change in revenue depends on elasticity of demand and not elasticity of supply

(A,B,C) are wrong answers

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