When demand is elastic, marginal revenue is
A) positive.
B) negative.
C) zero.
D) increasing as output increases.
E) undefined.
A
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Suppose an oil cartel has an agreement to restrict members' production in order to maintain a price of $30 per barrel. A single cartel member may want to cheat and exceed its quota so that it can:
A. reduce its costs. B. charge higher prices. C. make demand more inelastic. D. earn a bigger profit.
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
The rules and principles of economics that serve as a guide for action are known as
a. economic policy. b. economic theory. c. macroeconomics. d. microeconomics.
Suppose the production of a good results in negative externalities. If all costs are taken into account, then
A. output will occur at the socially optimal level. B. the price of the product will be higher than if all costs are not taken into account. C. more output will be produced than if all costs are not taken into account. D. a and b E. a, b, and c