A price cut will decrease the revenue a firm receives if the demand for its product is
a. elastic.
b. inelastic.
c. of unit elasticity.
d. straight elastic.
b
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An improvement in the technology used to produce goods would:
Moral hazard:
A. is a normative judgement about the moral choices made by economic agents. B. is about actions and occurs after the parties have voluntarily entered into an agreement. C. is always present when adverse selection arises. D. All of these statements are true.
When the absolute price elasticity of demand equals 1, demand is
A. elastic. B. unit-elastic. C. inelastic. D. undetermined without more information.
The last time the U.S. Post Office raised its prices for mail service critics of the rate increase argued that the Post Office's revenues would actually decline as a result of the price increase. It can be concluded that:
A) both groups believe demand is elastic, but for different reasons. B) both groups believe demand is inelastic, but for different reasons. C) the Post Office believes demand for mail service is elastic; opponents of the price increase believe demand is inelastic. D) the Post Office believes demand for mail service is inelastic; opponents of the price increase believe demand is elastic.