Suppose That When the Price of Ginger Ale Is $2

question 44

Multiple Choice

Suppose that when the price of ginger ale is $2 per bottle,firms can sell 4 million bottles.When the price of ginger ale is $3 per bottle,firms can sell 2 million bottles.Which of the following statements is true?

• A)The demand for ginger ale is income inelastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
• B)The demand for ginger ale is income elastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
• C)The demand for ginger ale is price inelastic,so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
• D)The demand for ginger ale is price elastic,so an increase in the price of ginger ale will decrease the total revenue of ginger ale producers.

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Definitions:

Franchisee

An individual or company that holds the rights to operate a business or sell goods or services under the trademark and systems of a franchise brand.

Exclusive Territory

A designated area or market where a franchisee is granted exclusive rights to operate, preventing competition within the franchise system.

Controversy

A prolonged public disagreement or heated discussion, often involving differing opinions on a particular matter.

Franchising

A method of conducting business where a franchisor licenses trademarks and proven methods of doing business to a franchisee in exchange for a recurring payment, and usually a percentage of gross sales or gross profits.