If the sellers in the cigarette industry formed a cartel and decided to set price along a straight-line downward-sloping demand curve, which point would they choose if they wanted to gain the highest total revenue?
a. The point nearest the vertical axis, where the price is highest.
b. The point nearest the horizontal axis, where quantity demanded is greatest.
c. One of the points higher up on the demand curve, where demand is elastic.
d. One of the points lower down on the demand curve, where demand is inelastic.
e. The point of unit elasticity, in the middle of the demand curve.
E
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Indicate whether the statement is true or false
Compared to the perfectly competitive firm, the monopolist's input demand curve is
A) more elastic. B) more inelastic. C) due to a constant per-unit price of the product. D) marginal factor cost.
A typical behavior that violates the assumption of rational behavior is:
A. saying you want to lose weight, but ordering dessert. B. being willing to pay more for something if you use a credit card than if you use cash. C. stubbornly watching to the end of a movie you've decided you're not enjoying at all. D. All of these demonstrate irrational behavior.
The stimulus strategy behind tax cuts will only be effective if Ricardian equivalence:
A. holds, and people increase their spending. B. holds, and people save more. C. fails to hold, and people increase their spending. D. fails to hold, and people save more.