7 Suppose a movie theater raises the price of popcorn 10 per

7. Suppose a movie theater raises the price of popcorn 10 percent, but customers do not buy any less popcorn. The price elasticity of demand for popcorn at this theater is _______, as a result of the price increase, total revenue will__________
8. Jacques loves Mello Yello and will spend $10 per week on the product no matter what the price. His price elasticity of demand for Mello Yello _____________
9. Of the following two goods, which has the higher price elasticity of demand ___ (Sunkist oranges/oranges) Of the following two goods, which has the higher price elasticity of demand___(salt/cars) Of the following two goods, which has the higher price elasticity of demand____ (travel in long/short run)
10. The Energizer Bunny that “keeps going and going” has been a very successful ad campaign for that brand of batteries. Through advertising, producers try to imprint their brand in your mind so that you will not consider substitutes for their product. They want you to consider only Energizer when buying batteries for all your devices. They do this to make demand for their product ___(more/less) elastic. If they achieve this, they can raise the price of their product and generate relatively _____(more/less) revenue.

Solution

ans 7demand for popcorn is perfectly inelastic and total revenue will increase.

ans 8. his price elsticity of demand for mello yello is unit elastic.

ans 9 sunkist oranges car and long run travel has a higher price elasticity.

ans 10. They do this to make demand for their product less elastic. If they achieve this, they can raise the price of their product and generate relatively more revenue.