Avital and Joshua each have their own business selling lemonade in front of their houses. When they each charge 25 cents per glass, their total revenues are equal. However, when they each charge 40 cents per glass, Avital's revenues are bigger than Joshua's revenues. This is because:
A) Joshua faces a more inelastic demand curve.
B) Avital faces a more elastic demand curve.
C) Joshua faces a more elastic demand curve.
D) Avital faces a less inelastic demand curve.
E) there is a market failure.

Question

Quizplus · Accepted Answer

When the price increases from 25 cents to 40 cents, Avital's revenues increase more than Joshua's, indicating that Joshua's demand is more elastic. This means that Joshua's customers are more sensitive to price changes, leading to a larger decrease in quantity demanded when the price increases.

Avital and Joshua Each Have Their Own Business Selling Lemonade