If the price elasticity of demand for an annual magazine subscription is 1.6 in the range between $26 and $30, what happens in the market when the subscription price rises from $26 to $30?
a. There will be an increase in the total revenue the magazine collects on its subscriptions.
b. There will be a decrease in the total revenue the magazine collects on its subscriptions.
c. Magazines will become a normal good.
d. Magazines will become an inferior good
Ans: b. There will be a decrease in the total revenue the magazine collects on its subscriptions.
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If a business firm operates indefinitely without covering any of its sunk costs, what happens to the firm's sunk costs?
A) Nothing happens to them; they have ceased to exist. B) They are distributed across the whole economy. C) They continue unpaid for as long as the firm fails to make a profit large enough to cover them. D) They reduce the wealth of the investors who risked their wealth to make mistaken decisions possible.
If an industry's long-run per-unit costs are constant as its output increases then
A) the firm's long-run economic profits must be greater than zero. B) the firm is most likely a decreasing-cost industry. C) the firm is most likely an increasing-cost industry. D) the firm is most likely a constant-cost industry.
Refer to Scenario 9.5 below to answer the question(s) that follow. SCENARIO 9.5: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 percent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $3 on average per meal. Refer to Scenario 9.5. In the short run, if the restaurant shuts down, it ________ variable costs and ________ revenue.
A. has; earns no B. has; earns C. has no; earns no D. has no; earns
Which of the following is not included in M1?
A. Savings account balances at a federal savings bank. B. Credit union share drafts. C. Transactions account balances at mutual savings banks. D. Currency in circulation outside of commercial banks.