If the Demand for New Cars Is Elastic, an Increase

question 215

Multiple Choice

If the demand for new cars is elastic, an increase in price will result in

• A) an increase in profits.
• B) an increase in total revenue.
• C) a decrease in total revenue.
• D) an increase in the quantity demanded.

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Definitions:

Peak-Load Pricing

Practice of charging higher prices during peak periods when capacity constraints cause marginal costs to be high.

Two-Part Tariff

Form of pricing in which consumers are charged both an entry and a usage fee.

Bundling

A marketing strategy that involves offering several products or services for sale as one combined product or service package.

Marginal Cost

The added cost of producing one additional unit of output.