Respuesta :
Answer:
Total revenue last year = $4 × 1000 = $4000
Total revenue this year = $6 × 800 = $4,800
Yes. It's a good economic decision because demand is inelastic. When demand is inelastic a rise in price would lead to an increase in profits.
Explanation:
Total revenue = price x quantity sold
Total revenue last year = $4 × 1000 = $4000
Total revenue this year = $6 × 800 = $4,800
To determine if raising the parking prices from one year to the next was a good decision, we have to determine the elasticity of demand.
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Elasticity of demand = percentage change in quantity demanded/ percentage change in price.
Percentage change in price = (6/4) - 1 = 0.5 = 50%
Elasticity of demand = 20% / 50% = 0.4
Demand is inelastic because the absolute value of elasticity is less than 1. If demand Is inelastic and prices are increased, total revenue rises because the fall in total demand would be less than the rise in price.
I hope my answer helps you
Answer:
The total revenue recieved this year from parking cars would be of $4,800
The station owner made a good decission in raising the ticket prices
Explanation:
In order to calculate the total revenue recieved this year from parking cars we would have to make the following calculation:
Revenue recieved this year from parking cars = $6*800
Revenue recieved this year from parking cars =$4,800
The total revenue recieved this year from parking cars would be of $4,800
Revenue recieved last year from parking cars = $4*1,000 = $4000
Since the revenue increased by $800 between the two years, the station owner made a good decission in raising the ticket prices.
