If a plastic surgeon has a “sale” and reduces prices, total revenue will go up for...

If a plastic surgeon has a “sale” and reduces prices, total revenue will go up for her services if:

Excess demand exists.
Price elasticity of demand is less than one in absolute value.
Price elasticity of demand is greater than one in absolute value.
Marketing raises price elasticity of demand.
Marketing lowers price elasticity of demand.

Solutions

Expert Solution

A) No, excess demand not exist because plastic surgeon is in exception with the decrease in price revenue little chnge in revenue

B)Demand is price inelastic if the absolute value of the price elasticity (ped) if demand is less than 1

Demand for a good is inelastic when a change in price has a relatively small effect on the quantity of the good demanded.

C) Demand is price elastic if absolute value of price elasticity of demand (ped) is more than 1.

Demand for good is Elastic when a change in price has a relatively large effect on the quantity of good demanded.

D) When the price elasticity of demand for a good(surgeon) is relatively inelastic (−1 < Ed < 0), the percentage change in quantity demanded is smaller than that price. Hence, when the price is raised raised, the total revenue increases,

E) when the price elasticity of demand for surgeon is Elastic, the percentage change in quantity demanded is greater than the price. Hence price is lower total revenue decrease.

Rahul Sunny answered 1 year ago

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