Would a profit-maximizing firm sell at a price where demand is inelastic? Explain
No. If demand is inelastic, then marginal revenue is negative. The firm could not possibly follow the profit-maximizing rule of MR = MC.
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Use the figure below to answer the following question.
The figure above shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S3?
A. a tax on wheat production B. a decrease in the price of wheat C. an increase in the price of wheat D. a subsidy for wheat production
Refer to Figures d and e. Bundle A is preferred to bundle B in Figure e and not in Figure d because:
A. the MRS between water in a rainy season and during a drought is higher in e than in d.
B. as the probability of a drought increases, consumers are no longer indifferent between the two bundles.
C. as the probability of a drought decreases, water in a rainy season becomes less valuable.
D. consumers are indifferent between bundles A and B as the probability of a drought increases.
The decline in unionization can be explained by all of the following except
A. Increased global competition. B. A relative decline in manufacturing. C. Increased worldwide investment barriers. D. Downsizing of major corporations.
Consider the relationship given by QCars = 100 + 4 × PCars - 2 × PSteel - 0.2 × PWorkers, where QCars is the quantity of cars supplied (in thousands), PCars is the price of cars (in thousands of dollars), PSteel is the price of steel, and PWorkers is the wage earned by autoworkers. If the price of steel is $10 per unit and the price of workers (the wage) is $20, what is the supply curve for cars?
A. QCars = 124 + 4 × PCars B. QCars = 100 + 4 × PCars - 2 × PSteel - .2 × PWorkers C. QCars = 100 + 4 × PCars D. QCars = 76 + 4 × PCar