16. The post office charges $1 to mail an iguana overseas. At this price 1,000 iguana are mailed each week. To increase revenue, the post office is considering an increase in the price of overseas iguana delivery to $2. Post office researchers have determined that the own price elasticity of demand for its iguana delivery service is 1/5. If the post office increases its price to $2:
  1. revenue will fall by $300.
  2. revenue will increase by $300.
  3. revenue won't change.
  4. revenue will fall by $600.
  5. revenue will increase by $600.

Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved