State whether the following statements are true or false a. If a product has price elasticity of demand greater than 1 then a rise in the price of the good will lead to a rise in total revenue received. b. A price elasticity of demand of 0.4 means that a 4% increase in price leads to a 10% reduction in the quantity of a good demanded. c. Goods A and B are complementary if a rise in the price of good A leads to a fall in the demand for good B
State whether the following statements are true or false
a. If a product has
b. A price elasticity of demand of 0.4 means that a 4% increase in price leads to a 10% reduction in the quantity of a good demanded.
c. Goods A and B are complementary if a rise in the price of good A leads to a fall in the demand for good B
a.) False, because if the price elasticity of demand is greater than 1 then a increase in the price of goods leads to decrease the total revenue.
Thus, the given statement is ‘false’.
b.) Price elasticity of demand can be calculated as follows:
Therefore, the price elasticity of demand is 2.5 not equal to 0.4.
Thus, the given statement is ‘false’.
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