Mention if the total revenue increses or decreases. Show work please. According

Question

Mention if the total revenue increses or decreases.

Show work please.

According to the table below, by how much will unit sales of (a) fresh fish, (b) shoes, and (c) gasoline decline when price goes up by 20 percent? What will happen to total revenue in each case? TABLE 4.1 Elasticity Estimates Price elasticities vary greatly. When the price of gasoline increases, consumers reduce their consumption only slightly: demand for gasoline is inelastic. When the price offish increases, however, consumers cut back their consumption substantially: demand for fish is elastic. These differences reflect the availability of immediate substitutes, the prices of the goods, and the amount of time available for changing behavior. Instructions: Enter only whole numbers for your answers. Input all amounts as positive values.

Explanation / Answer

price elasticity of demand for a good= %change in quantity/% change in price

For fresh fish,price elasticity = 2.2

2.2 = %change in quantity/20%

%change in quantity = 44%

unit sales = 44%

Total Revenue will increase

Shoes

price elasticity = 0.9

0.9= %change in quantity/20%

%change in quantity = 18%

unit sales = 18%

Total Revenue will increase

Gasoline

price elasticity = 0.2

0.2= %change in quantity/20%

%change in quantity = 4%

unit sales = 4%

Total Revenue will increase

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