If demand is unit elastic, a price reduction will
a. increase revenues
b. reduce revenues
c. reduce quantity demanded
d. have no effect on revenues
e. increase profits
D
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The increase in quality bias in the consumer price index refers to the idea that price increases in the CPI reflect pure inflation, but ________ quality increases. This causes the CPI to ________ the cost of the market basket
A) not; overstate B) also; understate C) also; overstate D) not; understate
In the efficiency wage model with the efficiency wage above the market-clearing wage, the level of employment depends on
A) the intersection of labor supply and labor demand. B) the marginal productivity of capital and the marginal productivity of labor. C) labor demand alone. D) labor supply alone.
Which of the following is a method by which a poor country might import technological change without having to incur the heavy expense of research and development (not to mention human and physical capital formation) out of its own saving?
A) Copy modern products made in rich countries. B) Purchase imported machinery that embodies the latest technology. C) Obtain investment by foreign firms. D) All of the above.
Implicit and explicit costs are different in that:
A. implicit costs are relevant only in the short run. B. the former refer to nonexpenditure costs and the latter to out-of-pocket costs. C. explicit costs are relevant only in the short run. D. the latter refer to nonexpenditure costs and the former to out-of-pocket costs.