Explain how firms use elasticity and revenue to make decisions
What will be an ideal response?
A company's total revenue is defined as the amount of money the company receives by selling its goods. This is determined by two factors: the price of the goods and the quantity sold.The law of demand tells us that an increase in price will decrease the quantity demanded.
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Large differences in interest rates between countries would indicate that
A) the global market is thriving. B) there is good communication between countries about potential global investment opportunities. C) there are unrealized gains from trade. D) the market is in danger of collapse. E) the supply growth exceeds the aggregate demand.
It is true that the equilibrium quantity will always go up if supply:
A) and demand both increase. B) increases and demand decreases. C) and demand both decrease. D) decreases and demand remains unchanged.
If a country pegs its currency to a foreign currency, it no longer has the ability to use monetary policy to stabilize the economy because:
A. monetary policy must be used to keep the exchange rate's market equilibrium value at its official value. B. banks will begin to hold 100% of their deposits in reserves. C. it must eliminate its currency from circulation and replace it with the foreign currency. D. it no longer has a central bank.
Refer to Figure 22-4. Within a country, the impact of wars and revolutions and their subsequent destruction of capital is reflected in the per-worker production function in the figure above by a movement from
A) B to A. B) A to C. C) E to B. D) B to C.