Question

Label the scenarios as examples of elastic, inelastic, or unit elastic demand. When Ruko, a device used to stream movies at home, increases prices by 39 %, total revenue decreases by 67 %. When Cinema Supreme decreases ticket prices by 19 %, total revenue does not change. When Bluebox, a DVD rental kiosk, increases its prices by 44 %, total revenue increases by 31 %.

Answer 1

case 1 elastic demand

case 2 unit elastic demand

case 3 inelastic demand

Step-by-step explanation:

case 1

increases prices = 39 %

total revenue decreases = 67 %

so it is example of elastic demand

because here price increase and that cause decrease in quantity demand

so here we know revenue will be come down

and

case 2

decreases ticket prices = 19 %

total revenue = not change

so it is example of unit elastic demand

because here price change and quantity demand similar

so here we know revenue does not change

and

case 3

increases its prices = 44 %

total revenue increases = 31 %

so it is example of inelastic demand

because here price change is greater than quantity demand

so it cause the increase in total revenue