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Katena32 [7]
3 years ago
14

Assume lawyer services are priced by the hour and elasticity of demand for a particular lawyer is 0.6. If she were to increase h

er hourly rate by 50%, we would expect the quantity demanded of her advice would _______ by _______, and revenue from her business would _______.
A. fall, 83%, rise
B. rise, 83%, fall
C. fall, 30%, rise
D. rise, 30%, rise.
Business
1 answer:
Dmitry [639]3 years ago
6 0

Answer:

C. Fall, 30%, Rise

Explanation:

  • Price Elasticity of Demand is responsive change in demand, due to change in price.

P.Ed = % change in demand / % change in price.

Given : Price rise by 50% , P.Ed = 0.6

So, % change in demand = P.ed x % change in price

% change in demand = 0.6 (50)

% change in demand = 30%

Law of demand states negative relationship between price & demand, so P.ed is negative. Price rise 50% reduces demand by 30%.

  • P.Ed can be : Elastic ( > 1 ), or Inelastic ( < 1 ).  If P.Ed is Elastic, price & total revenue are inversely related. If P.Ed is Inelastic, price & total revenue are directly related.

So, Given PEd = 0.6 (i.e < 1 ) : Inelastic Demand implies price & total revenue are directly related related to each other. So, price fall lead to TR fall & price rise lead to TR rise.

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3 years ago
When the price of paintings is set at $500, the local art gallery supplies 20 paintings per week. When the price of paintings in
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Answer:

the  price elasticity of supply is 0.555

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The same is relevant

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2 years ago
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Please see attachment for working notes and explanation

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