Dusty Rags, Inc provides janitorial services to retail stores. Dusty had been charging 10 per hour and selling 400 hours of service per week at that rate. When he raised his price to 15 per hour, his customers cut back to 300 weekly hours of service. Which of the following is true?
a. Revenue went from 4,000 per week to 4,500 per week, indicating that the demand curve for his services must have shifted to the right.
b. Revenue went from 4,000 per week to 4,500 per week, indicating that the demand for his services must be elastic.
c. Revenue went from 4,000 per week to 4,500 per week, indicating that the demand for his services must be inelastic.
d. Revenue went from 400 to 300 per week, indicating that demand must be elastic.
e. Revenue went from 10 to 15 per week, indicating that demand must be inelastic.
Question 2
Along a linear demand curve, total revenue is maximized when demand is
a. elastic
b. inelastic
c. unit elastic
d. perfectly elastic
e. perfectly inelastic
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