Which statement best describes the effect(s) that occur when a monopoly firm reduces the price of its product?
a. The "price effect" causes total revenue to fall.
b. The "output effect" causes total revenue to rise.
c. The "revenue effect" causes total revenue to remain constant.
d. Both a and b are correct.
d
You might also like to view...
Everything else equal, the AC curve will shift downward if
A. input prices rise. B. input MPPs rise. C. output rises. D. output falls.
If the utility function (U) between food (F) and clothing (C) can be represented as U = , the marginal rate of substitution of clothing for food equals
A) -C/F. B) -F/C. C) - . D) - .
Which of the following could be a direct cause of investment spending increasing?
A. The wealth of consumers increasing causing them to radically increase their purchases. B. Interest rates increase. C. A firms costs unexpectedly drop making their profit margin higher. D. Expected future income decreases.
Being able to measure the behavior of the economy with statistics such as GDP
a. is useful only in the accounting sense. b. is all that is necessary in order for us to be able to understand macroeconomics. c. can be helpful in developing macroeconomic science, but is not useful for policy making. d. is a crucial step toward developing the science of macroeconomics.