# What will happen to total revenue as a result of the price increase?

1. If the price of a good or service increases and the total revenue received by the seller declines, is the demand for this good over this segment of the demand curve elastic or inelastic? Explain.

2. Suppose the price elasticity of demand for farm products is inelastic. If the federal government wants to follow a policy of increasing income for farmers, what type of programs will the government enact?

3. Suppose the price elasticity of demand for used cars is estimated to be 3. What does this mean? What will be the effect on the quantity demanded for used cars if the price rises by 10 percent?

4. Suppose a university raises its tuition from \$3,000 to \$3,500. As a result, student enrollment falls from 5,000 to 4,500. Calculate the price elasticity of demand. Is demand elastic, unitary elastic, or inelastic?

5. Suppose a movie theater raises the price of popcorn 10 percent, but customers do not buy any less popcorn. What does this tell you about the price elasticity of demand? What will happen to total revenue as a result of the price increase?

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