If a drought increases the price of corn by 10% and decreases the quantity of corn demanded by 5%, then demand for corn is
A. elastic and total revenue to corn farmers will decrease.
B. inelastic and total revenue to corn farmers will increase.
C. inelastic and total revenue to corn farmers will decrease.
D. elastic and total revenue to corn farmers will increase.
Answer: B
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Which of the following describes a situation in which demand must be inelastic?
a. Total revenue decreases by 10 percent when the price of spats rises by 10 percent. b. Total revenue decreases by less than 10 percent when the price of spats rises by 10 percent. c. Total revenue increases by more than 10 percent when the price of spats rises by 10 percent. d. Total revenue decreases by $10 when the price of spats rises by $10. e. Total revenue decreases by more than $10 when the price of spats rises by $10.
When a firm is a price taker, changes in its sales quantity have ______ effect on the price it can charge.
A. a positive B. a negative C. no D. little
The averaging equation of elasticity solves the problem of
a. whether price or quantity is in the numerator b. which price or quantity to use as a base for calculating percentage changes c. whether to use quantity supplied or demanded d. removing the negative sign e. whether to use income or price in the denominator
One role of the interest rate is to
A. allocate capital to its most efficient uses. B. discourage saving and encourage current consumption. C. redistribute income from the wealthy to the poor. D. reduce the rate of inflation by encouraging government borrowing.