What happens to total revenue if price increases and demand is inelastic? Why?
What will be an ideal response?
Total revenue will rise if the price rises and demand is inelastic. This is because the percentage increase in the price exceeds the percentage decrease in the quantity demanded. Indeed, whenever, the demand is inelastic this means buyers are relatively unresponsive to a change in the price. Therefore, total revenue rises when price rises.?
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The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost
If the government assesses the marginal external cost correctly, what is the amount of the pollution tax that eliminates the inefficiency? A) $2 per pound B) $3 per pound C) $4 per pound D) $1 per pound E) None of the above answers is correct.
The situation of oligopoly suggests
A) many firms compete in an industry. B) mergers have not occurred. C) interdependence among firms. D) no barriers to entry exist.
Suppose that someone makes the argument that because empty alcohol containers are found at many accidents, the containers cause accidents. This would be an example of
a. sound logic. b. reverse causality. c. omitted variables. d. bias.
You operate a shop that repairs TVs and VCRs. The going wage rate in a competitive market for skilled repair people is $18 per hour. Given the current demand for your services, the marginal revenue product of your repair people is $28 per hour. You should
A. increase the number of repair people working for you. B. decrease the number of repair people working for you. C. make no change in the number of people you use. D. lay off all your employees and do all the work yourself.