The more substitutes for a good, the more elastic its demand
Indicate whether the statement is true or false
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The phone network says it loses money on local calls, because the $20 average monthly bill does not cover its average cost of $30. It estimates that $18 of costs are directly related to local service, with $12 the share from overall expenses (overhead). Why would the phone network be willing to operate if it is losing money?
What will be an ideal response?
Game theory is used to model decisions in situations where the players interact.
a. true b. false
The number of firms in a monopolistically competitive industry means that
A. existing firms in the industry will make sure new firms do not enter. B. firms will try to set a common price. C. firms will not cooperate to set a pure monopoly price. D. firms will collude.
When demand is unit elastic, an increase in price will cause
A. a decrease in total revenue. B. no change in total revenue. C. a change in total revenue in either direction depending on whether the price is increasing or decreasing. D. an increase in total revenue.