Suppose that Chris had been charging $1.00 per pound for potatoes. When Chris lowered the price to $0.90 per pound, his total revenue fell. When Chris raised the price to $1.10, total revenue also fell. Which of the following could explain this?
A. The price elasticity of demand for potatoes is 1 at a price of $1.00 per pound.
B. $1.00 is the equilibrium price for potatoes.
C. $1.10 is more than Chris's customers' reservation prices.
D. At 90 cents, there is excess demand for potatoes.
Answer: A
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Which of the following market structures has the highest market concentration?
A) A monopoly B) An oligopoly with differentiated products C) A perfect competition D) A monopolistic competition
A manufacturer that is trying to avoid the "double marginalization problem" can do so by encouraging competition rather than protecting retailers through exclusive territories, and controlling final product price through resale price maintenance
contracts. Indicate whether the statement is true or false
Which of the following is true?
a. Monetary policy influences long-term real interest rates more than short-term interest rates. b. Short-term interest rates are primarily determined by real factors and the expected inflation. c. A shift to a more expansionary monetary policy will tend to raise short-term interest rates. d. A shift to expansionary monetary policy that increases the fear of future inflation will tend to increase long-term interest rates.