Question

For three weeks in a row, the owner of a car rental agency increased the rental rate on compact cars yet TR increased each week. Assuming that there was no change in therelative demand

a) True
b) False

Answer 1

The owner of a car rental agency increased the rental rate on compact cars for three weeks in a row, but the total revenue (TR) still increased each week. This suggests that there was no change in the relative demand for compact cars.

Step-by-step explanation:

In this scenario, the owner of a car rental agency increased the rental rate on compact cars for three weeks in a row. However, the total revenue (TR) increased each week. This suggests that there was no change in the relative demand for compact cars, despite the increase in rental rates.

For example, let's say in the first week the rental rate for compact cars was $50 per day, and 100 cars were rented, resulting in a total revenue of $5000. In the second week, the rental rate increased to $60 per day, but the number of cars rented also increased to 120, resulting in a total revenue of $7200. Finally, in the third week, the rental rate increased to $70 per day, and 130 cars were rented, resulting in a total revenue of $9100. Even though the rental rate increased each week, the total revenue increased as well, indicating that the demand for compact cars remained relatively constant.

Therefore, the statement is true.