If demand for a seller’s product is elastic, a price decrease will increase total revenue.
Answer the following statement true (T) or false (F)
True
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
When a surplus exists
A. quantity demanded exceeds quantity supplied. B. the price is below the market clearing price. C. an excess quantity demanded exists. D. none of these
The price-output combination that maximizes profits for a monopolist occurs at the point where
A. total revenues and total costs are equal. B. total revenues are the greatest. C. the difference between total revenues and total costs is the greatest. D. the elasticity of demand equals one.
Refer to Scenario 10.5. From the perspective of the firm, what is the marginal cost of the 5th garden hose?
A) 4 B) 5 C) 16 D) 12 E) 8