Exhibit 5-5 Price of X Price of X Price of X 2.00 150- 1.00 2.00 150 1.00 2.00 A

Question

Exhibit 5-5 Price of X Price of X Price of X 2.00 150- 1.00 2.00 150 1.00 2.00 A 150 0 1.00 0 50 100 0 Quantity of X 90 100 0 Quantity of X Quantity of x- Refer to Exhibit 5-5. Assume that the seller of X increases the price from $1.50 to $2.00, and this results in an increase in total revenuc. Which of the grphs represents the demand curve for X b. (2) c. (3) d. all of the above Refer to Exhibit 5-5. For graph (3), if the seller of X raises the price from $1.50 to $2.00, the total revenue the seller receives will a. decrease by $30. b. increase by $30. c. decrease by $5. d. not change. Refer to Exhibit 5-5. Which of the graphs represents a greater percentage change in quantity demanded than the percentage change in price? b. (2) c. (3) d. (2) and (3)

Explanation / Answer

Answer1. b. Graph 2.

When price increase to $2 revenue will become 90 *2 =$180. At $1.5 revenue is $1.50*100 = $150

Answer2. d. Not change.

Revenue when price was $1= $1*150 = 150 and when price is $2 = 75*$2= $150

Answer3. a. graph 1

The percentage change in price is 33% whereas the quantity demanded decreases by 50 %. Whereas in graph 2 & 3 quantity demanded change by 10% and 25%.

Graph Price Demand 1 1.50 100 2 50 2 1.50 100 2 90 3 1.5 100 2 75

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