Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand to make the money she needs. Your mother is paying for all of the ingredients. She currently is charging 25 cents per cup, but she wants to adjust her price to earn the $50 faster. If you know that the demand for lemonade is elastic, what is your advice to her?
A)Leave the price at 25 cents and be patient.
B)Raise the price to increase total revenue.
C)Lower the price to increase total revenue.
D)There isn't enough information given to answer this question.
Suppose the point (Q = 2,000, P = $60) is the midpoint on a certain downward-sloping, linear demand curve. Then
A)an increase in price from $40 to $42 will increase total revenue.
B)a decrease in price from $61 to $59 will leave total revenue unchanged.
C)the maximum value of total revenue is $120,000.
D)All of the above are correct.
Moving downward and to the right along a linear demand curve, we know that total revenue
A)first increases, then decreases.
B)first decreases, then increases.
Total revenue will be at its largest value on a linear demand curve at the
A)top of the curve, where prices are highest.
B)midpoint of the curve.
C)low end of the curve, where quantity demanded is highest.
D)None of the above is correct.