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Author Question: The change in total welfare from a 10 increase in price will depend only on the elasticity of ... (Read 51 times)

littleanan

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on: Jul 1, 2018
The change in total welfare from a 10 increase in price will depend only on the elasticity of demand.
 
  Indicate whether the statement is true or false

Question 2

Consumers who are more sensitive to changes in price suffer a greater loss of consumer surplus from any given price increase.
 
  Indicate whether the statement is true or false


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kilada

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Reply #1 on: Jul 1, 2018
Answer to Question 1

False. The effect of a price change also depends on revenue changes.

Answer to Question 2

False. Consumers who are more sensitive to the price increase will reduce their purchase of the good by a greater extent than those who are not price sensitive. As a result, they incur a smaller loss of consumer surplus.


littleanan

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Reply 2 on: Jul 1, 2018
:D TYSM

xiazhe

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Reply 3 on: Yesterday
Excellent

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