If a firm faces a downward-sloping demand curve
A) the demand for its product must be inelastic.
B) it has no control over the price or the quantity sold.
C) it must reduce its price to sell more units.
D) it will always make a profit.
Answer: C) it must reduce its price to sell more units.
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If the economy is operating at a 7 percent unemployment rate we are operating
A. inside the production possibilities curve. B. on the production possibilities curve. C. outside the production possibilities curve
If exports increase, then the aggregate expenditure curve shifts ________ and equilibrium expenditure ________
A) upward; decreases B) upward; increases C) downward; increases D) downward; decreases E) upward; does not change
Suppose a developing country experiences a reduction in machinery and capital equipment as foreign entrepreneurs decrease the amount of investment in the economy. As a result,
A) the economy will move up along the long-run aggregate supply curve. B) the long-run aggregate supply curve will shift to the left. C) the long-run aggregate supply curve will shift to the right. D) the economy will move down along the long-run aggregate supply curve.
During the recession phase of the business cycle, business firms become pessimistic about their future earning capacity as do banks. Nominal interest rates fall during recessions. Investment lending could be expected to
A) rise if the change in future earnings is thought to be greater than the change in interest payments. B) stay the same. C) fall. D) fall if the change in future earnings is thought to be greater than the change in interest payments.