Related to the Economics in Practice on page 102: Frank runs a corner delicatessen and one day decides to raise his prices by 10 percent. Total revenue is likely to ________ at the end of the first month of the higher prices since demand is relatively elastic in the ________ term.
A. rise; long
B. rise; short
C. fall; long
D. fall; short
Answer: C
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If you have $1,000 in wealth and the price level increases by 20 percent, then
A) the $1,000 will buy fewer goods and services. B) the $1,000 dollars will buy 20 percent more goods and services. C) the real value of the $1,000 increases. D) you will be able to buy fewer goods, but the real value of those goods will increase.
The above figure shows supply and demand curves for milk. If amount Q2 is produced in the market,
A) producer surplus is maximized. B) consumer surplus is minimized. C) a deadweight loss is generated. D) All of the above.
Market clearing prices can be volatile in a market with inelastic demand and inelastic supply
Indicate whether the statement is true or false
In the open-economy macroeconomic model, if net capital outflow increases then
a. the demand for dollars in the market for foreign-currency exchange shifts right. b. the demand for dollars in the market for foreign-currency exchange shifts left. c. the supply of dollars in the market for foreign-currency exchange shifts right. d. the supply of dollars in the market for foreign-currency exchange shifts left.