Part (1) How will AD and A\S affect total revenue? AD A AS ERERCEEMESA Elica ? Market Price Artie (AP) AQuantity Transacted ARBE ZX) A Total Revenue Asses ties (AP x AQ) Demand { Rt Demand } BRL Supply t eet ‘Supply + PRESPart (2) Elasticity and Total Revenue SEES SH BS Ua (A) Under what condition would the total revenue increase or decrease? (Given the change in supply) FEATRRIRE N > ASA ESHE EFT THE? (CARIGERE AIEEE ) Case 1: Increase in supply (fei ‘Under what condition would the total revenue increase? TEAR F + SSA Uz see DO ? Under what condition would the total revenue decrease? CE RLORE T+ ARBRE URS RRR) ? Diagram, te Verbal explanation BeadPart (2) Elasticity and Total Revenue SHE BAAS SS FE Uses Case 2: Decrease in supply ft fleje2> ‘Under what condition would the total revenue increase? ‘Under what condition would the total revenue decrease? TERT F + See Cae seh ? TEPLELORT TF» SRSA BU RSHe LY ? P P Diagram fmt ° Q Q Condition: Condition: If the demand is _clastic/inelastic_, the If the demand is _elastic/inelastic , the total revenue would increase. total revenue would decrease, fet: fete SPR ALC: + AS ES SORE AE + BSA UCe Verbal etn a: explanation SCR “the percentage _increase decrease in the market price is _larger/smaller_ than the percentage _increase/decreaso_ in the quantity demanded. “TRL AE Bb HES FR at_LABe NE Batt “the percentage _inerease decrease in the market price is larger/smaller_ than the percentage _increase decrease . in the quantity demanded. ‘WLR BA Ae PRA _LASL TM Sst»Part (2) Elasticity and Total Revenue SREB AS SH Ec as (B) Explain the change in total revenue (Given elasticity of demand) PERMASH (DAL RIE) Cases ATotal Revenue z Ct=) Elasticity of demand> 1 RTE > 1 8 Elasticity of demand <1 Co RRL <1 Elasticity of demand = 1 PERIL <1 = ¢ Elasticity of demand = 0 RIE = 0 i. Elasticity of demand = «o FERTE = 2 c QPart (2) Elasticity and Total Revenue SEBS AS BU aes ATotal Revenue APREIE = © Ass ths ax revives) Elasticity of demand> 1 i. FORTE >| 7 1 Elasticity of demand <1 ae PRIMI <1 : i Elasticity of demand = 1 P te aR 1 Elasticity of demand =0 pe BRIE = 0 r ule Elasticity of demand = © > cePart (2) Elasticity and Total Revenue Se EAM ces (C)Explain the elasticity of demand (Given the change in total revenue) PERRIS RSA HE ( CARIRRSH CaS ) Total revenue decreases SA FE coe Explanation Basti of exo PERT Prieheae . clastic #3: Total revenue increases Jinelastic (ESR EE sates kA : supply ae te elastic ARE praia ‘inelastic ETRE a7 Supp deren - clastic 53H Total revenue increases inelastic ETRE Sates EF Sapp deers : clic HIRE Jinélastic ETREPart (2) Elasticity and Total Revenue SH ESAS SH EUR aS ()Three special cases ERE Explanation Elasticity of 7 et Demand (Diagrams fi) FORAE ‘Afier change in supply, the quantity transacted remains unchanged. UE | GRRE - After a change in supply, the total expenditure remains unchanged, RM + PALER ‘After a change in supply, the market price remains unchanged. PERL + HERPart (2) Elasticity and Total Revenue SR ERTS Eas Good A RA 2000 1800 1500 Good B Total OB 1000 1200 1500 een Good € set x mee 1000 2000 3000 Good D 2D 1000 1000 1000 lastcity of demand ERIE Good A 5b A Good B HB Good C RC Good D ‘aDMcQ. (1) ATotal Revenue (ADemand V.S. ASupply) Ata AUAS (ATER VS. AGE) 1. Am increase in the demand for a good will lead to an increase in the consumer expenditure on that good a decrease in the consumer expenditure on that good. an increase in the consumer expenditure on that good ifthe demand is elastic. an decrease in the consumer expenditure on that good ifthe demand is elastic. 2. An increase in the supply of good will lead to A B. c ‘an increase in the consumer expenditure on that good, a decrease in the consumer expenditure on that good. an increase in the consumer expenditure on that good if the demand is elastic. an decrease in the consumer expenditure on that good if the demand is elastic. 1. SCR RRR» A B. c D. RSE ATS eH + PRB MATS SB » SERERRE REEMA sen0 SRM ATE HIRO Be 2. SAS CEA RT HHO + 9 9p PRB RBA K ih ete - RATER RATI GMD - on Baek MSRM 0 - AR SERRAMcQ 3. Refer to the following diagram. CII) Classifying elasticity (given diagram) MVR Gettee) Unit Price 4 = Area A = Area B D > Quantity ° Suppose Area A equals to Area B. The demand for that 00d is pom 4, Refer to the following diagram, elastic, inelastic, unitary elastic. perfectly elastic. Unit Price - =Area A =AreaB D > Quantity 0 ‘Suppose Area A is larger than Area B, The demand for that good is A. elastic. B. inelastic, C. unitary elastic. D. perfectly elastic. 3 Sere eats = IRA = we Ti ~~» > Bult ° TR A SRR B + BANA A. senaoateeY « B. ASERHEAY Cae - D. se ETRE « 4. SBF ARH i) = BRA = Hitt e D o —> Bue ERR A ARSE B + RRA A BRERA « B. RISSIMEA - CFR Ay - D. eR SRtERY +McQ 5. Refer to the following diagram. Unit Price ‘Quantity From $2 to $3, the demand for that good is clastic inelastic. unitary elastic. perfectly elastic, yom> 6. Refer to the following diagram. Unit Price Quantity From $2 to $3, the demand for that good is A. elastic. B, inelastic. C. unitary elastic D. perfectly elastic, 5. SBI Til « 6 SBeT EH Bara o 10 13 a E82 BS RI NR yoePMcQ 7. Refer to the following diagram. 1. Shite Unit Price Sr ‘Quantity ae ‘The demand for the above good is unitary elastic. The 35 EMULE RB RAL SBE + X (ELE value of X is A 106 A 10. B. 20+ B. 20, C306 Cc. 30. D. 40+ D. 40. COMcQ 8. Refer to the following diagram. Point M is the 8. SBA TUB + M SERRE RARATP RS - midpoint of the demand curve. LOS Unit Price ‘Quantity BRL HS4 PIS > Mees If the unit price falls from $4, the total revenue A @XiS80+ A. will be larger than $80. B. tr3Hss80 - B. will equal to $80. CC. ssiAS80 + C. will be smaller than $80, dD. AbewNHS8O - D. may be larger or smaller than $80. C] 9. Refer to the following diagram. Point M is the 9. SRIF - M BRERA SRR ES « midpoint ofthe demand curve. RA Unit Price at Quantity ‘SMES EFPESP > MUA TIDES) 2 the unit price raises from $10 to SP, what would be a Possible value of total revenue? A. 700 B. 800 A 700 Cc. 900 B. 800 D. RAEBETE Cc. 900 D. uncertain O LOMcQ (IIL) Elasticity and Total Revenue TRESS OEIL A, 10. Refer to the following table. 10. SRIF: Price ($) 10 20 30 {48 ($) 10 20 30 ‘Sales Revenue ($) 2000 1800 1600 SA BUS (S. 2000 1800. 1600 Within the above price range, the demand for that good FEEISII » BEAT > ee is ‘and the elasticity ofthe demand willbe #e A a a AL Bae. AGE A greater than | B. MRE... NT B. smaller than | CASE. ABS C. inelastic ... greater than 1 D. (SSRHE .. NT ‘D. _ inelastic ... smaller than 1 11, Refer to the following table 1. SBER > Price($) 10 20 30 (iB (S$) 10 20 30. Sales Revenue(@) 1o00_| 1000 [i000 seus )_[_1000_[ 1000 —| “i000 Within the above price range, the demand for that good equals 100. is smaller than 1 equals to 1. is larger than 1 pomp EMOTE + DSLR SH O° INL © SR1+ Kiel yor>McQ 12, Arise in the price of good X from $1 to $3 leads toa 12. X HasuAYABAGES! EAZESS + rise in the consumer expenditure on good X from $100 $B th HS100 F+ 28300 + EMIT > MIE 10 $300, Within the above price range, the demand for eK ‘good X is A Bt A. unitary elastic. BRE TRHE B. inelastic. Cc. eR C. perfectly elastic. D. seBfRoRtE D. perfectly inelastic. 0 13. An increase in the price of computers increases from 13. @ SAAB eS10 000 F+ZES12 000 » se BUL RETA $10 000 to $12 000 results in a decrease in total sales RD > abt» ERR » AMAR revenue, Thus, within this price range, the demand for ‘computers A. ARIE - B. hese + A. elastic. Co eR ARE + B. inelastic. iD. Mit < C. perfectly ineaste. D. unitary elastic. O 14, The demand for rice is elastic. Assuming that other 14. AUER TERER + RAIDS factors remain unchanged, when the supply of rice FRB ERAT CERERLD » RRRENEEUL A reduces. The total income of the farmers of rice A BALI + A. may increase, B. BRAT PE B. may decrease. CEA LA + C. must increase. D. QSEAAT TM + D. must decrease.McQ 15. An increase in the supply of good X will cause the 15. XARA AND ERTS market price of good X to If the demand is ORR RACE > Waar inelastic, the total income of sellers will a ‘A. increase ... increase A EF B. increase .., decrease Bo LH C. decrease ... increase Cc. Fie D. decrease ... decrease a oe 16. Japan exports fewer vehicles into Hong Kong. 16, BAAR AAMT + RATER LE A AES ‘Therefore, Hong Kong's expenditure on Japanese cars xe A. will reduce since there are substitutes. A. BRITT RE + Bas eette, © B. _ will rise since the prices of Japanese cars B. BRITE + BASE _EFt « rises. CGO BRE © C. will not change since there are substitutes. D. BE LASE THE D. may increase or decrease. ULMcQ 17. Mr. Sin says “I love the massage service of Miss Kong. Even though she raises the price by 20%, I will not change the amount of spending on her service.” ‘The demand of Mr. Sin for Miss Kong is perfectly inelastic. inelastic. elastic. unitary elastic. youP 18, Mr. Sin says “I love the massage s Even though she raise the price by 20%, I will stil patronize Miss Kong for 2 bours per weeks.” of Miss Kong. 17. Fede: RARE MALATE > BUGLE ae 20% » Fie FA EMERG BIBS 5 EA oF FRAN ARB R BR A. BSRIE B. (55K Cc. Rte D, B-tt- O 18. odide > SURREAL HERES « BNET USED 20% » BARRA BAS EE RRL 2 1s ARs y ‘The demand of Mr, Sin for Miss Kong is, ARENT NEN BEATE RBIS A. perfectly inelastic, AL Se MSE « B. inel BGs C. last Cc. emt + D. unitary elastic. D. Bite. Oo 19, Refer to the following table. 19, SBF Price | Quantity demanded | Total revenue ts OR sibs (s) (unit) () (s) (SBfir) (8) 6 30 180 6 30 180 12 18 2 12 18 2 18 12 72. 18 12 2 24 9 72 24 9 72, 30 2 0 30 2 60 Within which of the following price range is the demand for the above good unitary elastic? $6108 18 $6 10 $24 $12 to $24 $120 $30 pomp Fel ales + ERR ? A $6 sig B. $6 $24 Cc. $i2B $24 D. $i2¥ $30mca 20. In which of the following situations can the total revenue of a good increase? (1) arise in demand for it (2) a fall in demand for it 3) a fall in the price of it (1) and (2) only (and @) only (@)and (3) only A B, cc. D. (1), @)and@) 21. In which of the following situations will the total revenue of a good definitely increase? (1) arise in demand for it (2) arise in the price and inelastic demand for it (3) a fallin the price and elastic demand for it 20. SPURL F + SMEARS By LATO ? Q) BavmR oO + Q) ARR G) Cave Tk - RA (1)-(2) Ra (1+ (3) RH (2)+(3) (1)+(2)+@) poe 21. FRIEPRR T+ SiaeaE era Pe NO? (1) BAyreRsO ° 2) CAYBHELLA > MIRE RASSRHE » 3) CASE TRE » TURRET « RB (1)+(2) A A. (I)and (2) only B. RA (1)+(3) B. (1)and (3) only C. RA (2)-(3) C. Q)and @) only D. (1)=(2)*(3) D. (1), @)and 3) 22. Given that the demand for wheat is inelastic, if there is ‘poor harvest of wheat, the expenditure on wheat will and the quantity transacted will on decrease pop 22. RIERA » BNR + VISE ——' Xaae : AL Sth... EF Bin. Fhe CRD kt D. Rb. FeMcQ 23, If the price of cross-harbor buses increases. The 23, AUREL SANE NO FSA EE LHe expenditure of passengers on cross-harbor buses x TaRReREDEOM and the expenditure on MTR _. A ar enn will reduce ... will increase B. atin FUEHEDO > RATER will increase ... may increase or decrease c. BURESNDO > RATED STEAD > OR ‘may increase or decrease ... may increase or AREY poe D.STRBSRDO > ASTRA eth may increase or decrease... will increase > Opp