Question #17230

True OR False ? No justication required
The company Blissful Batteries Inc. sell replacement batteries for Opple's oPad. In the following, p denotes the unit price of these batteries in dollars and q the quantity sold. We assume that the function q(p) is differentiable with q'(p) < 0. Blissful Batteries Inc. sell 10000 batteries per week at $5.00 each.
(d) If the replacement battery is a price unit elastic good at a unit price of $5.00, if their total cost function is of the form C(q) = a+bq with constants a; b > 0 and management increases the price by a small amount, then their prot decreases.
(e) If the replacement battery is a price inelastic good at every unit price and management decreases the unit price by 0.2%, then quantity demanded increases by less than 0.2%.
(f) If the replacement battery is a price inelastic good at every unit price and management decreases the unit price by 1%, then quantity demanded decreases by more than 1%.

Expert's answer

The company Blissful Batteries Inc. sell replacement batteries for Opple's oPad. In the following, p denotes the unit price of these batteries in dollars and q the quantity sold. We assume that the function q(p) is differentiable with q'(p) < 0. Blissful Batteries Inc. sell 10000 batteries per week at $5.00 each.

(d) If the replacement battery is a price unit elastic good at a unit price of $5.00, if their total cost function is of the form C(q) = a+bq with constants a; b > 0 and management increases the price by a small amount, then their pro t decreases.**True. Profit decreases because quantity decreases**

(e) If the replacement battery is a price inelastic good at every unit price and management decreases the unit price by 0.2%, then quantity demanded increases by less than 0.2%.**False. Quantity will increase higher than 0.2%**

(f) If the replacement battery is a price inelastic good at every unit price and management decreases the unit price by 1%, then quantity demanded decreases by more than 1%.**False. Quantity will decrease higher than 1%**

(d) If the replacement battery is a price unit elastic good at a unit price of $5.00, if their total cost function is of the form C(q) = a+bq with constants a; b > 0 and management increases the price by a small amount, then their pro t decreases.

(e) If the replacement battery is a price inelastic good at every unit price and management decreases the unit price by 0.2%, then quantity demanded increases by less than 0.2%.

(f) If the replacement battery is a price inelastic good at every unit price and management decreases the unit price by 1%, then quantity demanded decreases by more than 1%.

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