If the Price of a Widget Increases from $40 to $50

question 7

Multiple Choice

If the price of a widget increases from $40 to $50 which of the following would be the expected result

• A)Total revenue will increase
• B)Total revenue will decrease
• C)Total revenue will initially increase but return to previous level
• D)Total revenue will not be affected

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Definitions:

Differentiated Products

are goods or services that are distinguishable from each other on the basis of quality, features, or branding, leading to non-price competition among firms.

Perfectly Elastic

A situation in economics where the quantity demanded or supplied changes by an infinite amount in response to any change in price, represented graphically as a horizontal line.

Monopolistic Competitor

A type of market structure characterized by many firms selling products that are similar but not identical, allowing for some degree of market power.

Monopolistically Competitive

Refers to a market setup where multiple companies offer products that are closely related but not the same, granting them limited market influence.