When a firm is on the inelastic segment of its demand curve, it can:
A. increase total revenue by reducing price.
B. decrease total costs by decreasing price.
C. increase profits by increasing price.
D. increase total revenue by more than the increase in total cost by increasing price.
Answer: C
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Electric utilities have trumpeted nuclear power for years, advocating it as lower in production costs than other alternatives. Yet, society has resisted heavy reliance on nuclear power. Explain the source of the disagreement and suggest which side (utilities or society) is correct
In which market structure is there a large number of firms producing slightly differentiated products?
A) monopoly B) oligopoly C) only perfect competition D) only monopolistic competition E) either perfect competition or monopolistic competition
In the above figure, the economy is initially at point B. If the Fed increases the quantity of money, there is
A) a movement to point C. B) a movement to point A. C) a shift to AD2. D) a shift to AD1.
If the government places a $0.50 tax on an item for which demand is perfectly elastic
A) the entire tax will be paid by the consumer. B) the tax will be split equally between the consumer and producer, with each paying exactly $0.25. C) most of the tax will be paid by the consumer. D) the entire tax will be paid by the producer.