The elastic portion of the downward-sloping straight-line demand curve lies:
A. at the intersection with the supply curve.
B. above the point of unit elasticity.
C. anywhere to the right of the current market price.
D. below the point where total revenue is maximized.
Answer: B
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Firms in an oligopoly are said to be interdependent. What does this mean?
What will be an ideal response?
If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be
a. of unitary elasticity. b. relatively inelastic. c. relatively elastic. d. perfectly elastic.
What is the difference in the price elasticity of demand for alcohol in the short run and in the long run?
a. 1.6
b. 2.7
c. 3.6
d. 4.7
Consider a monopolist attempting to engage in limit pricing with total costs C(Q) = 200 + 10Q. The market (inverse) demand for its product is P = 150 ? 2Q. Currently, the monopolist produces 40 units of output. Assuming the potential entrant has the same cost structure as the incumbent monopolist, is it profitable for the entrant to produce 20 units of output?
A. No, since the market price of $70 is less than the average total cost of producing 20 units. B. No, since the market price of $30 is less than the average total cost of producing 20 units. C. Yes, since the market price of $70 is greater than the average total cost of producing 20 units. D. Yes, since the market price of $30 is greater than the average total cost of producing 20 units.