Anna owns the Sweet Alps Chocolate store. She charges $10 per pound for her hand made chocolate. You, the economist, have calculated the elasticity of demand for chocolate in her town to be 2.5
If she wants to increase her total revenue, what advice will you give her?
You should tell her to lower her price. Because demand is elastic, lowering the price will increase the total revenue.
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When leisure is a normal good, the wage elasticity of labor supply is always positive.
Answer the following statement true (T) or false (F)
Economies of scale, control over a scarce input, and patents are all examples of barriers to entry
a. True b. False Indicate whether the statement is true or false
Which of the following statements is a major criticism of a pure monopoly as a source of allocative inefficiency?
A. A pure monopoly fails to expand output to the level where the price of an additional unit is just equal to its marginal cost. B. A pure monopoly will always generate economic profit, and that means that prices are too high. C. A pure monopoly has an unfair advantage because it can purchase labor at a lower price than perfectly competitive firms can. D. A pure monopoly has no incentive to produce efficiently, because even the inefficient pure monopoly can be assured of economic profits.
If marginal cost is constant, what happens to a market if it alters from perfect competition to monopoly without any change in the position of the market demand curve or any variation in costs?
A. Consumer surplus increases, producer surplus decreases and a deadweight loss is created. B. Consumer surplus increases, producer surplus increases and a deadweight loss is created. C. Consumer surplus decreases, producer surplus decreases and a deadweight loss is created. D. Consumer surplus decreases, producer surplus increases and a deadweight loss is created.