The marketing people for AT&T believe that if they lower the price of long-distance phone calls by 5 percent, their quantity demanded will increase by 15 percent. If they are correct in their belief, then
A) the demand for long-distance phone calls is price inelastic.
B) the total revenue from long-distance phone calls will increase if they lower the price.
C) the demand for long-distance phone calls is income elastic.
D) the total revenue from long-distance phone calls will decrease if they lower the price.
B
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Suppose the U.S. government encouraged new teachers to take jobs in underperforming schools by paying the new teachers a $20,000 bonus. These teachers would be exemplifying the economic idea that
A) people are rational. B) people respond to economic incentives. C) equity is more important than efficiency. D) optimal decisions are made at the margin.
Why is the distinction between long run and short run less important in monopoly markets?
What will be an ideal response?
The term "early adopters" refers to
A) consumers who respond quickly to fads, seasonal changes, etc. B) consumers who are willing to pay high prices to be among the first to own new products. C) firms that are the first to implement a new technology that is used to produce new goods or services. D) book clubs that are first to recommend best-selling books to their members.
Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below.ProcessABCDE(smoke/day)(4 tons/day)(3 tons/day)(2 tons/day)(1 tons/day)(0 tons/day)Cost to Acme ($/day)$750$800$1,000$1,400$2,000Cost to FirmCo ($/day)$500$750$1,200$2,200$4,000 Suppose the firms are both currently using process A. If the government requires each firm to reduce pollution by 20 percent, then the firms will adopt process ________, and a total of ________ tons of smoke will be emitted each day.
A. B; 16 B. A; 18 C. D; 8 D. C; 12