A public transit company finds that when it reduces the price of a bus ticket, total revenues remain the same. One can conclude from this that:
a. the demand curve is horizontal, reflecting infinite price elasticity.
b. the company sells the same number of bus tickets both before and after the price change.
c. the demand curve for bus tickets must have shifted to the right.
d. the firm is operating in a range of the demand curve that is unit elastic.
e. the price should be lowered further so that a larger quantity can be sold.
d
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Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
An example of a good that is both rival and excludable is
A) the defense services provided by a new stealth bomber. B) a pair of pants. C) a beautiful sunset. D) an uncrowded theme park such as Walt Disney World.
It's not likely that a country will specialize completely in one good even if it has a lower opportunity cost because
A. Comparative advantage is not a workable concept in the world economy. B. Opportunity costs increase as more of a good is produced. C. The country would end up inside its production possibilities curve. D. The country would want to save some of the good for its own citizens.
An implication of the downward slope of the demand curve for a monopolistic competitive firm is that
A. its marginal revenue curve slopes downward but lies below the demand curve. B. its marginal revenue curve is the same as the demand curve. C. its marginal revenue curve slopes upward. D. its marginal revenue curve slopes downward but lies above the demand curve.