The total revenue/expenditure rule of elasticity suggests that when price and total revenue go
A. in opposite directions, demand is elastic.
B. in opposite directions, demand is inelastic.
C. in same direction, demand is elastic.
D. to infinity, demand is perfectly inelastic.
Answer: A
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Many believe that fairness calls for higher income taxes on the wealthy. Using one of the “Ideas for Beyond the Final Exam,” explain how higher taxes on the wealthy will affect output.
What will be an ideal response?
Which of the following observations is true?
A. Free markets will achieve all of society’s goals. B. The ability to buy goods is divided equally among consumers. C. The market leads to efficiency in production through the profit motive. D. The market system encourages firms to use inputs wastefully.
Explain how we "read" the three scatter diagrams in Figs. A1.3 and A1.4
What will be an ideal response?
Fiscal policy is the use of
A. Trade policy to alter macroeconomic outcomes. B. Money and credit controls to alter macroeconomic outcomes. C. Government spending and taxes to alter macroeconomic outcomes. D. Tax incentives, deregulation, and other mechanisms to increase the ability and willingness to produce goods and services.