Using Figure 6-3(b), as price falls from $15 to $6, the elasticity of demand is (dropping all minus signs)
A. 0.857.
B. 1.167.
C. 1.0.
D. 0.67.
Answer: B
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Refer to Scenario 11.1. Suppose all five ranchers know that their land that Mariana needs is worth a total of $2 million. If each rancher agrees to sell his or her parcel of land to Mariana for $500,000, Mariana will purchase
A) all five parcels of land and the railway will be built. B) all five parcels of land but the railway will not be built. C) only four parcels of land and the railway will be built. D) no parcels of land and the railway will not be built.
Increases in real GDP are considered the best measure of increases in living standards, because they measure:
a. only increases in prices. b. only increases in production. c. both increases in prices and increases in production. d. only increases in the cost of living
Which of the following is NOT true for a perfectly competitive firm in the long run?
A) MR = MC B) MC > LAC C) Price = MC D) SAC = LAC
Answer the following questions true (T) or false (F)
1. If a monopolist's price is $50 and average total cost is $43, then the average profit is $7. 2. If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25, then to maximize profit the firm should decrease output. 3. In the short run, even if a monopoly's total revenue does not cover its variable costs, it should continue to produce because ultimately in the long run, the monopoly will start earning profits.