Scenario 4.3: The Demand for Erasers (Q) Is Given as Follows

question 167

Multiple Choice

Scenario 4.3:
The demand for erasers (Q) is given as follows:
Q = 240 - 4Pe + 2I + Pb + A
where Pe is the price of erasers
I is the level of income
Pb is the price of another good
A is the level of advertising
Suppose that Q = 240, Pe = 10, Pb = 10, and A = 2.
-Given the information in Scenario 4.3, suppose that the price of erasers increases slightly from $10. How will this affect the total revenue collected by the firm?

• A) Total revenue will increase.
• B) Total revenue will not change.
• C) Total revenue will decrease.
• D) There will be an indeterminate change in total revenue.

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Definitions:

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