Chuck grim has a price elasticity of demand for beer

42. Chuck Grim has a price elasticity of demand for beer of 1.2. Suppose that the price of beer is
increased by 10 percent. What will happen to the total amount Chuck spends on beer?
A) It will not change
B) It will decrease
C) It will increase
D) It is impossible to tell
Answer: B
Topic: Price Elasticity of Demand
Difficulty: 1 Easy
Learning Objective: 04-02
Bloom’s: Level 3 Apply
AACSB: Analytic
[QUESTION]
43. If the price elasticity of demand for orange juice is 0.8, then a reduction in the price of orange
juice will cause buyers to buy:
Reference: 04-44
Use the following to answer questions 44-45:
[QUESTION]
44. Refer to the table above. If the price starts falling from $5, at what price range does demand
become inelastic?

45. Refer to the table above. What is the price that yields the maximum total revenue?
Reference: 04-46
Use the following to answer questions 46-50:
[QUESTION]
46. Refer to the above graph. If the price is P
3
, then the total revenue is represented by areas:
A) B + C + D
B) E + F + G
C) B + C + D + E + F + G
D) A + B + C + D + E + F + G
Answer: C

Topic: Price Elasticity of Demand
Difficulty: 1 Easy
Learning Objective: 04-02
Bloom’s: Level 3 Apply
AACSB: Analytic
Refer to: 04-46
[QUESTION]
47. Refer to the above graph. If the price decreases from P
3
to P
2
, then the loss in total revenue is
areas:
[QUESTION]