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Recommended textbook solutions Principles of Economics8th EditionN. Gregory Mankiw 1,209 solutions Krugman's Economics for AP2nd EditionDavid Anderson, Margaret Ray 1,042 solutions Principles of Microeconomics4th EditionN. Gregory Mankiw 600 solutions Principles of Macroeconomics5th EditionN. Gregory Mankiw 446 solutions Why does demand change in the opposite direction from price changes?The problem in assessing the impact of a price change on total revenue of a good or service is that a change in price always changes the quantity demanded in the opposite direction. An increase in price reduces the quantity demanded, and a reduction in price increases the quantity demanded.
Why do price and total revenue go in opposite directions when the demand for the good is elastic?Elastic demand is more sensitive to price, so small changes in price results in larger changes in quantities, changing revenue in the opposite direction to prices.
Why do substitutes affect both demand and elasticity of demand?Because substitute products offer a similar utility, they will choose it when the price of an item rises. Thus, the availability of substitute goods affects the elasticity of demand for goods or services.
What happens to the total expenditures for a product with elastic demand when its price goes up?Total expenditures decrease because people buy less of the product when the price increases.
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Why do demand for substitutes and demand for the original goods tend to move in opposite directions
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