Elaine, a Small Grocer, Is Planning to Cut Certain Prices

question 33

Multiple Choice

Elaine, a small grocer, is planning to cut certain prices to increase her sales revenues. What will be the likely result of a price decrease for matches, a good for which the demand is inelastic, and a price decrease for fresh green tomatoes, an item for which consumer demand is elastic?

• A) The total revenue derived from both will go up.
• B) The total revenue derived from matches will increase, but total revenue derived from tomatoes will decline.
• C) The total revenue derived from matches will decline, but total revenues derived from tomatoes will increase.
• D) The total revenues derived from both will decline.

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Definitions:

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