(solution) Terms (i) Perfectly inelastic demand (ii) Relatively inelastic demand (iii) Unit elastic demand…

(solution) Terms (i) Perfectly inelastic demand (ii) Relatively inelastic demand (iii) Unit elastic demand…

Terms (i) Perfectly inelastic demand (ii) Relatively inelastic demand (iii) Unit elastic demand (iv) Relatively elastic demand (v) Perfectly elastic demand 3 True or false (a) Demand for coach travel is relatively elastic, so lower fares can be expected to raise total revenue for the coach company.            TrueFalse (b) Demand for rail transport is relatively inelastic so a rise in fares can be expected to reduce total revenue for the train operating company.             TrueFalse (c) Price elasticity of demand for air travel has a numerical value (ignoring sign) of 3, so a 1% cut in price will lead to a 3% expansion of demand and a rise in total revenue.       TrueFalse (d) A certain make of shoes has been found to have a unit elastic demand. A 5% rise in price can be expected to result in a 5% contraction of demand and an unchanged total revenue. TrueFalse