Using a graph, show why marginal revenue is always less than price
What will be an ideal response?
The demand curve slopes down so the firm must lower price to sell another unit. It receives the price for that unit, shown in the figure above by rectangle Q1cb Q1+1. However, it lowers price so it receives less on the Q1 units it could have sold at P1. This reduced revenue is area P1acP2. The extra revenue then is Q1cb Q1+1 - P1acP2, which is less than P2. Hence, the marginal revenue is less than the price.
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Refer to the scenario above. If they are the only bidders in the auction and each of them uses his optimal strategy, who will win?
A) Tom B) Bill C) Jeff D) Roger
In what sense is tariff escalation protectionist? What alternatives exist for remedying this problem?
What will be an ideal response?
In most cases, the higher is the quality of the collateral for a loan is
A) the higher is the interest rate. B) the lower is the interest rate. C) the riskier is the loan. D) the greater is the handling charge for the loan.
The movement of households from rural to urban settings reduced the degree of specialization in household production
a. True b. False