If a revenue-maximizing firm is told that the price elasticity of demand at current prices is equal to one, it should
a. raise prices 1 percent
b. lower prices 1 percent
c. raise prices until the elasticity becomes very high
d. keep the price where it is
e. lower prices until the elasticity becomes very high
D
You might also like to view...
If a tax is imposed in a market in which demand is perfectly inelastic
A) the buyers pay the entire tax. B) the sellers pay the entire tax. C) the buyers and the sellers both pay a portion of the tax. D) neither the buyer nor the seller pays the tax.
If real GDP increases from $5 billion to $5.25 billion and the population increases from 2 million to 2.02 million, real GDP per person increases by ___ percent
A. 5.0 B. 1.0 C. 2.5 D. 4.0
The idea that new policies change the economic rules and affect economic behavior, so that no one can safely assume that historical relationships between variables will hold when policies change, is known as
A) Okun's Law. B) Say's Law. C) the equation of exchange. D) the Lucas critique.
An ideal voting system will not function if a _________ is present, and has the power to enact his or her own preferences.
A. bully B. representative C. consul D. dictator